The Crash: Another view

Matthew D. Mitchell has a different opinion about The Crash of 2008 and the resulting bailouts:

As the 10th anniversary of the historic bailout of 2008 looms, many people will undoubtedly say —as President Bush said at the time—that it was necessary to abandon“free market principles to save the free market system.” They will tell us that the government had no alternative. And they will say that the bailout “worked” because the economy didn’t go from a recession to a depression.

The truth is that there were alternatives. As our George Mason University colleague Garett Jones has written, a process known as “speed bankruptcy”—endorsed by economists on the left and the right—would have permitted quick conversion of bank debt into bank equity, recapitalizing the banks while avoiding the use of taxpayer funds.

We can’t be certain of what would have happened had something like speed bankruptcy been tried. But we do know that even with the bailout, the economy fell into the deepest and longest-lasting recession since the Great Depression. That is hardly proof positive that it “worked.”

Moreover, we know from the history of bailouts that the true cost of a bailout is not the taxpayer expense (which is often recouped) but the expectation it sets for future bailouts, an expectation that invites future disaster.

In 1971, the US government gave Lockheed Aircraft Corporation $250 million in emergency loan guarantees. It was the first time the federal government ever came to the rescue of a single firm. Shortly thereafter, the bankrupt Penn Central Railroad and other struggling railroads received hundreds of millions of dollars in emergency grants and loan guarantees. That was followed by $1.5 billion in loan guarantees for the ailing Chrysler Corporation in 1979.

The phrase “too big to fail” entered the American lexicon in the wake of a federal bailout of Continental Illinois Bank in 1984. Next, the federal government bailed out the creditors of hundreds of savings and loan (S&L)associations in the late 1980s and early 1990s at a cost to taxpayers of around $150 billion. In the late 1990s, the Fed orchestrated the private bailout of hedge fund Long-Term Capital Management. No taxpayer money was involved, but the Fed’s keen interest in the case led many industry observers to believe that the Fed would not let large institutions—or their creditors—fail.

The record-setting federal bailout of 2008-09 showed that these expectations were accurate. First, the New York Federal Reserve made a $30 billion loan to J. P. Morgan Chase so that it could purchase Bear Stearns. Next, in order to save them from bankruptcy, the federal government took over mortgage giants Fannie Mae and Freddie Mac. Then the government paused, allowing Lehman Brothers and its creditors to fall on September 15, 2008. Two days later, bailouts resumed and the Federal Reserve made an $85 billion loan to the insurance firm American International Group. The culmination of this series of bailouts was the Troubled Asset Relief Program (TARP), a $700 billion bailout that gave hundreds of financial firms and auto companies emergency government assistance.

Although proponents of the Dodd-Frank financial reform legislation, passed after the 2008 meltdown, claimed it would help avoid future government bailouts, the perception that major financial interests are “too big to fail” remains an unfortunate reality. The Federal Reserve Bank of Richmond’s “Bailout Barometer” periodically estimates the extent to which the financial industry’s liabilities are explicitly and implicitly backed by the federal government. According to the most recent estimate, the share of financial sector liabilities subject to implicit or explicit government protection from losses grew from 45 percent in 1999 to 60 percent in 2016, by which time they amounted to $26 trillion. The authors succinctly note that “This protection may encourage risk-taking, making financial crises and bailouts more likely.”

As the Richmond Fed researchers explain in an accompanying document, the Bailout Barometer includes “other liabilities [that] are believed by many market participants to be implicitly guaranteed by the federal government.” The expectation that a company and its creditors will be bailed out by the government, should they find themselves in dire financial straits, can be an extraordinary privilege.

Take, for example, Fannie Mae and Freddie Mac. Well before they were rescued by the federal government, Fannie and Freddie benefited from the expectation of government assistance. The firms were chartered by Congress and widely assumed to have its financial support. This assumption meant that compared with firms lacking support from the federal government, Fannie and Freddie appeared to be safer investments. As the Congressional Budget Office explains, this expectation, in turn, provided the companies a competitive advantage against private competitors:

“Because of their implicit federal guarantee, Fannie Mae and Freddie Mac could borrow to fund their portfolio holdings at much lower interest rates than those paid by fully private financial institutions that posed otherwise comparable risks, and investors valued the GSEs’ credit guarantees more highly than those issued by fully private guarantors … The advantages of implicit federal support allowed Fannie Mae and Freddie Mac to grow rapidly and dominate the secondary market for the types of mortgages they were permitted to buy (known as conforming mortgages). In turn, the perception that the GSEs had become “too big to fail” reinforced the idea that they were federally protected.”

The federal government’s history of bailing out creditorsmade this expectation especially strong.

Now that the summer of 2008 is a decade in the rearview mirror, we should be mindful that bailouts– and expectations thereof–encourage risky behavior, inviting crisis and further bailouts. Notwithstanding Mr. Bush’s assertion, one cannot save free enterprise by abandoning free enterprise. And free enterprise runs on market signals. Just as firms need profit signals to encourage good decision making, they need loss signals to discourage mistakes.

Unfortunately, just as the bailouts of the ‘70s, ‘80s, and ‘90s begat the massive bailouts of the 2000s, the likelihood of further–and perhaps even larger–bailouts in the future remains disconcertingly high.



The Crash: One view

The New York Times’ Neil Irwin writes about the financial meltdown of a decade ago, and reactions to the fixes:

It’s hard to overstate how deeply Americans despised their government’s response to the global financial crisis. It has helped shape the last decade of American politics, fueling distrust of powerful institutions and speeding a drift toward ideological extremes.

But for all that anger, the engineers of the American crisis response got the economics mostly correct, and more right than most of those — including leading economic thinkers and prominent politicians — who were second-guessing them.

I was a beat reporter covering the events at the time and the key players — including the former Treasury secretaries Hank Paulson and Tim Geithner, and the former Federal Reserve chairman Ben Bernanke — and then wrote a bookon the crisis. Looking back on it a decade later, I’m struck by the way that I, and they, misunderstood what “success” would actually mean.

The engineers of the response succeeded in their immediate goal, to preserve the financial system. But they — or, more precisely, they and their political leaders at the time — also left fissures that threaten to undermine the system they sought to preserve. The very underpinnings of modern capitalism are being questioned from all sides. A Republican administration has gleefully cast aside trade deals, for instance, and the energy among Democrats is around democratic socialism.

To understand the challenges and ultimately the failure of the politics of their response, it helps to put yourself back in 2008 and 2009, when the financial might of the United States government — trillions of dollars, cumulatively — was deployed to try to contain the crisis.

Mr. Geithner, Mr. Paulson and Mr. Bernanke are centrists in the context of modern American politics, but they are conservatives in the traditional sense — people trying to preserve a system they inherited.

Their strategy was to patch things up as quickly as possible. The goal was not to try to reinvent Wall Street on the fly, but to keep the flow of capital coursing through the global economy while minimizing the depth and duration of the recession that the crisis had caused.

Some 230 academic economists signed a letterattacking the bank bailout legislation that Mr. Paulson proposed as unfair and a potential threat to the vibrancy of private markets.

Mr. Geithner’s disinclination to nationalize banks drew fierce criticism from liberals who argued that the government was essentially funneling money to banks with little assurance they would resume lending.

“Whatever its merits, his bailout plan offers generous subsidies to banks and private investors while protecting bank management and creditors,” John B. Judis wrote in 2009 in a New Republic article titled “The Geithner Disaster.”

Mr. Bernanke’s efforts to pump money into the economy by buying up bonds also met opposition. A group of conservative economists wrote a letter in 2010 arguing that the Fed’s plans to engage in quantitative easing “risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.”

These attacks were misguided.

Mr. Paulson’s financial rescue package did not herald an era of socialism on Wall Street; nor did it come at a huge continuing cost to taxpayers. By many measures, it made money.

Mr. Geithner’s stress tests achieved their goal of restoring confidence in major banks without the cost and political damage of nationalizing them. They were successful enough that similar stress tests are now a part of regulators’ tool kits both in the United States and overseas.

Mr. Bernanke’s aggressive monetary policy probably played a role in getting the expansion on track starting in mid-2009. Quantitative easing and low interest rates did not cause a collapse of the dollar or spiraling inflation.

Nobody would argue that the United States economy is perfect, or that the policymakers got everything exactly right.

If Mr. Paulson had secured financial rescue legislation before Lehman Brothers went bankrupt, perhaps the most severe phase of the crisis could have been avoided altogether, though it is a puzzle how he could have gotten the votes for such a plan before the crisis became more severe. If Mr. Bernanke had moved faster — putting an open-ended quantitative easing program in place in 2009 or 2010 instead of waiting till 2012 — maybe full recovery would have come sooner.

It’s not clear how the recovery might have looked had Mr. Geithner embraced a more activist approach to replacing management and taking greater government control of the most troubled large banks, notably Citigroup and Bank of America. Or if he had welcomed a larger program to help relieve borrowers who were underwater on their homes.

The tactics the men chose can be second-guessed, but the result of their efforts speaks for itself. The expansion has lasted nine years, the second longest on record. Although job gains were disappointingly slow for years, the unemployment rate is now 3.9 percent, among the lowest in decades.

From 2007 to 2017, per-person inflation-adjusted G.D.P. rose 6.3 percent in the United States, compared with only 3 percent in the eurozone, where similar policies were embraced more slowly.

In exhaustive research of the history of financial crises, the economists Carmen Reinhart and Kenneth Rogoff found that it takes eight years on average for a society to return to its level of per-person income. The United States did so in 2013, only six years after the peak of the crisis.

The political price

It was Feb. 19, 2009, less than a month into the Obama administration. Mr. Geithner and his colleagues had introduced plans to assist struggling homeowners, which many liberal critics considered deeply inadequate.

The human cost of the foreclosure crisis was indeed immense; there were 2.8 million foreclosures that year alone. But the politics of helping troubled homeowners were more toxic than the crisis managers had foreseen.

From the floor of the Chicago Mercantile Exchange, the CNBC broadcaster Rick Santelli began a rant for the ages. “How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills?” Mr. Santelli said, as traders cheered behind him. “President Obama, are you listening?”

“We’re thinking about having a Chicago tea party in July,” he continued.

The term stuck, and was embraced by the conservative activists who propelled Republicans to victory in the 2010 midterm elections — driven, in no small part, by opposition to economic stimulus, financial bailouts and the work of the Federal Reserve.

The policymakers knew history’s warnings about economic policy that reacts too sluggishly to financial crisis.

Mr. Geithner spent some evenings in the darkest days reading in Liaquat Ahamed’s “Lords of Finance” about how an earlier generation of policymakers bungled the response to the Great Depression. Mr. Bernanke is a scholar of that era in his own right.

But they seemed to assume that if they got the economics right, popular support would follow. As Mr. Bernanke wrote in his memoir about the Santelli rant, “I remained perplexed that helping homeowners was not more politically popular.”

There’s a reason, of course, that they were in their roles as appointed technocrats and not politicians. But it isn’t clear that George W. Bush or Barack Obama had any better ideas for bringing along the public than did the men they chose to lead financial policy. The crisis response may well have been a Rubik’s Cube of political and economic challenges too complicated to solve.

It was foreseeable, perhaps, that many on the left would view the Geithner-Paulson-Bernanke strategy as too friendly to Wall Street interests. It was also foreseeable that the libertarian right would loathe the bailouts. More surprising were the ways in which some of the biggest beneficiaries of the strategy became vocal opponents.

The Geithner strategy was based on rescuing Wall Street, using hundreds of billions of taxpayer dollars — while building a more rigorous regulatory system to try to prevent a similar crisis.

But by the time what became the Dodd-Frank Act was on its way to passage in 2010, the financial industry and nearly all Republicans in Congress had committed to all-out opposition of industry regulation. Only three of 178 Republican House members, for example, supported the bill.

Even as Mr. Bernanke’s easy money policies pushed the stock market upward and coincided with a gradually improving economy and low inflation, the drumbeat of commentary was overwhelmingly negative.

You could turn on a financial network at nearly any hour of the trading day and hear complaints about how quantitative easing and zero interest rates were distorting markets. When Mr. Bernanke left office in early 2014, when the stock market was soaring and the unemployment rate was falling fast, only 28 percent of Republicans approved of his performance, according to a Gallup survey.

Success has rarely been so unpopular.

How the crisis broke our politics

In July, Mr. Bernanke, Mr. Geithner and Mr. Paulson were together again. They invited a handful of reporters to interview them in a conference room at the Brookings Institution, where they will be participating in a crisis retrospective in September.

Might the rise of anti-establishment parties around the world — not least Donald J. Trump on the right and Bernie Sanders-esque socialists on the left in the United States — be traced to their work as crisis responders?

“We know from history that financial crises, particularly big ones, do tend to get followed by a populist reaction,” Mr. Bernanke said. “I think we all tried our best to explain what we were doing and work with the politics, as difficult as it was. I think back to the crisis, we were very focused on preventing the collapse of the financial system. And developing our communication to the broad public wasn’t always our first priority.”

He argued, though, that longer-term trends — like stagnation in middle-class wages, social dysfunctions, rising mistrust in government and hostility to immigration — were a bigger explanation for the rise in a politics of extremes.

This analysis seems both correct and incomplete. Of course, the embrace of anti-immigrant nationalism on the right and of socialism on the left have roots considerably deeper than a bank bailout or a quantitative easing program.

But it was the experience of the crisis, and the sense among Americans of all ideological dispositions that they were being asked to foot the bill for someone else’s mistakes — whether by Wall Street C.E.O.s or by Mr. Santelli’s neighbor with the renovated bathroom — that helped make those long-simmering problems boil over.

The response to the crisis was in many ways the high-water mark for a mold of centrist, technocratic policymaking that seeks to tweak and nudge existing institutions toward better outcomes. It also undermined any widespread popular support for that mode of governing for the foreseeable future.

It turns out, when you throw trillions of dollars at rescuing a system that most people don’t like very much in the first place, the result isn’t relief.

It’s anger.

Watch this space for another opinion on this subject.


Trump’s rural economy

The Brookings Institution:

Rural and smaller-town places seemed to be “winning a little more” in 2017, even though the larger trend in the 2010s has been for the nation’s biggest, bluest metropolitan areas to dominate job growth. During President Trump’s first year in office, in fact, rural places captured a slightly disproportionate share of U.S. job growth, while the nation’s big cities slightly underperformed. It was good to see more places participating in the nation’s economic expansion.

Which raises the question: How are things looking as the politicians leave Labor Day behind and lock in on the 2018 midterm elections, with their volatile themes of division, imbalance, and resentment? To see, we have looked at several go-to resources and observe again that the more balanced growth picture of last year is continuing, with more places participating in the economic good times. As the elections approach, smaller, redder places are doing relatively better than they were in 2016.

The central dynamic of the Trump period persists. As Table 1 shows, goods-producing industries have been surging while services industries have seen their seasonally adjusted employment growth slow since 2016.

Table 1

To be more specific, while information-sector growth has turned negative in the last two years (with a slight recovery starting in 2018), resource extraction and manufacturing industries have been growing at their fastest rates since the financial crisis. Mining and logging pursuits (which include oil and gas extraction) have seen rapid employment growth based on strong hiring in the various support activities associated with the sector like exploration and prospecting. Meanwhile, machinery manufacturing; electrical equipment, appliance, and component manufacturing; and fabricated metal product manufacturing have all been growing smartly as domestic demand has kept factories humming.

These patterns are notable for what they say about the contours of national economic activity but also because they reflect what’s happening on the ground, in particular urban and rural areas. And in this regard, the dynamics of the current economic surge—strong goods production and relatively weaker services provision—slightly disfavor larger, bluer, tech- and service-oriented metros, and relatively favor smaller, more rural, and redder communities by comparison to their recent problems. This conclusion aligns with the findings of smart analysts like Jed Kolko of Indeed. And it suggests that growth patterns are now playing out fairly positively for many if not all smaller communities and rural areas.

To see this check out the county employment map—first for the first quarter of 2016, and then for the first quarter of 2018 (Map 1). As is very visible growth was more widely dispersed this year than in the earlier period:

Likewise, while the bulk of the nation’s job creation has continued to take place in the nation’s 52 largest metropolitan areas with 1 million residents or more, the employment growth rates of smaller and rural communities actually outpaced those of both the nation and other types of communities earlier this year (Figure 1). This performance was stronger than last year’s. Whether or not seasonal trends portend slower smaller-town and rural growth through the late summer and fall as they often do, the fact remains that smaller communities have been doing relatively better this year.

As to what this means for the fall election, it is no doubt good news for the reeling Republican Party as it slouches towards the midterms. To be sure, very little of the favorable economic shift likely owes to President Trump’s erratic flailing and bluster. As Kolko notes, the rebound of mining employment tracks global oil prices closely. And for that matter manufacturing growth likely reflects normalizing domestic purchasing and stronger global demand. Yet, the current dynamics could be helpful to the Republicans, to the extent that the direction of economic change—measured by employment growth—influences political sentiment and political behavior. After all, counties that voted for Hillary Clinton in 2016 experienced 4 percent annualized employment growth in the first quarter of 2018, unchanged from the first quarter of 2017, whereas counties that voted for Trump were seeing growth of 5.1 percent a year earlier this year, up from 4.9 percent a year before that and 4.3 percent in early 2016. Many small-town and rural communities may be feeling that things are finally moving in the right direction.

With that said, the political impacts of these incremental growth shifts toward redder counties will likely be modest, and are likely temporary. Cultural rage appears at this point more central to red America politics than economic soothsaying. Beyond that, both near-term and longer-term headwinds lie ahead. In the near term, Trump’s chaotic trade stances may still cost counties manufacturing jobs. Over the longer term, the cyclical nature of many of the industries that have contributed to the current rural and small-town uptick—ranging from agriculture and mining to oil and gas—does not make those commodity industries reliable sources of sustained prosperity. Nor do smaller communities’ education deficits, shortages of digital skills, and specialization in the types of rote jobs that will be most susceptible to automation and globalization.

For now, a little winning in small-town and rural America is welcome news for a nation that has mostly been pulling apart during the last decade.

The latest bad governmental idea

The Los Angeles Times reports:

The announcement puts the search giant squarely in the White House’s crosshairs amid wider allegations against the tech industry that it systematically discriminates against conservatives on social media and other platforms.

Kudlow’s remark to reporters outside the White House came hours after Trump fired off a series of predawn tweets complaining about Google search results for “Trump News.”

In a pair of tweets posted before 6 a.m., the president said the results included only “the viewing/reporting of Fake New Media.” He later deleted the tweets and reposted them, changing “New” to “News.”

“Google search results for ‘Trump News’ shows only the viewing/reporting of Fake News Media. In other words, they have it RIGGED, for me & others, so that almost all stories & news is BAD. Fake CNN is prominent. Republican/Conservative & Fair Media is shut out. Illegal? 96% of results on ‘Trump News’ are from National Left-Wing Media, very dangerous. Google & others are suppressing voices of Conservatives and hiding information and news that is good. They are controlling what we can & cannot see. This is a very serious situation-will be addressed!” Trump wrote in his tweets.

Google said its searches aren’t politically biased: “When users type queries into the Google Search bar, our goal is to make sure they receive the most relevant answers in a matter of seconds,” the company said in a statement. “Search is not used to set a political agenda and we don’t bias our results toward any political ideology.

“Every year, we issue hundreds of improvements to our algorithms to ensure they surface high-quality content in response to users’ queries,” Google said. “We continually work to improve Google Search and we never rank search results to manipulate political sentiment.”

On Tuesday afternoon, Trump escalated his attacks on the tech industry in response to questions from reporters in the Oval Office, where the president was meeting with Gianni Infantino, president of FIFA, soccer’s international governing body.

“I think Google is really taking advantage of a lot of people,” Trump said. “And I think that’s a very serious thing, and it’s a very serious charge.… We have literally thousands and thousands of complaints coming in. And you just can’t do that. So I think that Google and Twitter and Facebook, they’re really treading on very, very troubled territory. And they have to be careful. It’s not fair to large portions of the population.”

Trump’s tweets came the morning after Fox Business News host Lou Dobbs aired an interview Monday night with the pro-Trump commentators Lynnette Hardaway and Rochelle Richardson, popularly known as Diamond and Silk, who have long claimed that their online videos are being suppressed by tech companies.

“I am not for big government, but I really do believe that the government should step in and really check this out,” Hardaway told Dobbs in the interview.

Google search results are affected not only by region but also by the user’s personal search history. It was unclear whether Trump had Googled himself, or whether he was referring to a recent report in PJ Media, a conservative blog, alleging that 96% of Google search results for news about Trump were from “left-leaning news outlets.” His accusations appeared to mirror those in the Aug. 25 piece.

“Is Google manipulating its algorithm to prioritize left-leaning news outlets in their coverage of President Trump?” asked Paula Bolyard, the “supervising editor” of the site who describes herself on Twitter as a Christian, a constitutional conservative and a “Cultural nonconformist.”

She said she searched “Trump” on Google News and weighed the results using a media bias chart developed by Sharyl Attkisson, a former CBS News correspondent. Bolyard said left-leaning outlets accounted for 96% of the results, with CNN stories making up nearly 29% of the total. She said she performed the search several times using different computers, and the results did not differ considerably.

But nowhere did the editor and blogger reckon with the fact that the sheer volume of content produced by different outlets plays a major role in determining the share of results they claim. She did, however, acknowledge that her methods are “not scientific.”

A search for “Trump News” shortly after the president’s posts returned three top stories. There was a Fox News report about Lanny Davis, an attorney and spokesman for Trump’s former lawyer Michael Cohen, admitting he was an anonymous source for CNN’s report about Trump’s possible prior knowledge of the summer 2016 meeting at Trump Tower attended by a Russian lawyer. There was also a CNN account of Trump’s decision to issue, several days late, a statement praising the late Sen. John McCain (R-Ariz.). And there was an NBC story about the surge of Muslim candidates inspired to run for office across the country by Trump’s election.

Trump has raised increasing alarm about what he describes as political bias pervading technology and social media companies. In July, he accused Twitter of using a “discriminatory and illegal practice” to silence conservative voices. Jack Dorsey, the chief executive of the social media giant, said the company’s employees are “more left-leaning” but maintained that political ideology doesn’t affect what appears on Twitter.

Representatives of major technology companies appeared before Congress in July to answer allegations of censorship.

“We have a natural and long-term incentive to make sure our products work for users of all viewpoints,” said Juniper Downs, who works on policy for Google-owned YouTube.

Remember when Republicans were opposed to more regulation of the Internet (i.e. net neutrality)? Those were good times.

This also shows an alarming lack of memory on the Trump administration’s fault, if he’s serious about regulating search engines. The White House was Democratic two years ago. The White House could be Democratic a little more than two years from now. That which a GOP administration regulates now could be regulated in worse ways by Democrats after the next presidential election.

The last time I checked, there were other search engines besides Google. That was the result of a largely unregulated Internet. More regulation is not the answer.


The I word

The Wall Street Journal is of two not necessarily contradictory minds on what might be happening to Donald Trump.

First, the WSJ editorial board:

Shhhhhhhhh. Whatever else you do, please don’t mention the “I word” between now and November. That’s the public message from Democratic leaders and most of their media friends this week after Michael Cohen’s guilty plea and his criminal allegations against President Trump. Between now and Election Day, “impeachment” is the forbidden word.

“If and when the information emerges about that, we’ll see,” says once and perhaps future House Speaker Nancy Pelosi. “It’s not a priority on the agenda going forward unless something else comes forward.”

Mr. Cohen’s charges are serious, says Senate Democratic Whip Dick Durbin, but impeachment talk is “premature” because “more information has to come forward” and it’s “too early in the process to be using these words.”

Under the coy headline “Can Trump Survive?”—you already know his answer—Washington Post columnist E.J. Dionne counsels Democrats that “the argument for impeaching Trump suddenly became very strong, but this does not mean that turning 2018 into an impeachment election is prudent.”

And if you believe this misdirection, you probably also believe that Donald Trump didn’t canoodle with Stormy Daniels.

The political reality is that Democrats are all but certain to impeach Mr. Trump if they take the House in November. After what they’ve said and the process they’ve set in motion, Democrats won’t have much choice. They simply don’t want to admit this now before the election lest they rile up too many deplorables and independents who thought they elected a President for four years.


Let’s make the reasonable guess that Democrats retake the House with 228 seats, a narrow but solid 10-seat majority. They’ll have done so after two years of claiming that Mr. Trump is an illegitimate President who conspired with the Kremlin to steal the 2016 election, that he is profiting from the Presidency for personal gain, that he obstructed justice by firing James Comey, and that after Michael Cohen’s plea the President is now “an unindicted co-conspirator” in campaign-finance fraud.

If Democrats finally gain the power to do something about this menace to mankind, do they suddenly say “never mind”?

No doubt Democrats would start slowly by revving up the investigative machinery: subpoenas, hearings, all covered to a fare-thee-well by the media. Michael Cohen will be a major witness, as will the others named in the plea-deal documents. The Trump tax returns will get a star turn.

Once this starts, it will be hard to stop even if Democratic leaders want to. It will be even harder to stop if special counsel Robert Mueller writes a report to his superiors (that will inevitably leak) saying he couldn’t indict a sitting President but here is the evidence that he may have obstructed justice or have shady finances. The evidence may not even matter much since impeachment is a political process and Congress defines what are “high crimes and misdemeanors.”

Meanwhile, the battle for the 2020 Democratic nomination will be underway, with multiple candidates vying for the hearts and minds of liberal voters. They’ll compete to see who can be the loudest voice for impeachment. Even Terry McAuliffe, the former Virginia Governor who wants to run for President and who defended Bill Clinton against impeachment, has said impeaching Donald Trump is “something we ought to look at.”

There will be more-in-sorrow-than-anger calls for sober judgment, but political momentum has a mind of its own. The party’s liberal base will demand that Democrats be counted on an impeachment vote, and so will its media elites, who want vindication for believing that Mr. Trump could never have legitimately defeated their heroine.

The smarter political play might be to wait until 2020 and ride a potential wave of national fatigue with Mr. Trump, but don’t underestimate the degree to which liberals want this President to be politically humiliated and legally punished. Read their Twitter feeds and columns if you don’t believe us.

We don’t know how impeachment would play out politically in 2019 and 2020. An impeachment based on acts that have nothing to do with Russian collusion would offend much of the public, but as the New York Times joyfully put it this week, “that may not matter.” While a conviction in the Senate may seem improbable at this point, Democrats might not care because they’ll have made Republicans defend Mr. Trump’s behavior.

The main point about this election year is that no one should believe Democrats when they say that impeaching Donald Trump isn’t on their agenda. It’s their only agenda.

The first two thoughts are that any dip in the market represents a buying opportunity, and people in the market should be long-term investors anyway. The Nixon market is a classic correlation vs. causation issue given that thanks to the Organization of Petroleum Exporting Countries oil prices jumped substantially at a time when inflation had been an issue for most of the decade to that point, leading to such bad Nixon policies as wage and price controls.

Next, Spencer Jakab:

Assigning credit or blame to the man in the White House for the stock market’s performance is an unwinnable argument. Guessing what would happen if he were to unexpectedly leave office is another matter.

President Trump in an interview on Fox News that aired Thursday said he thinks “the market would crash” and that “everybody would be very poor” if he were impeached. History says otherwise. When John F. Kennedy was assassinated in November 1963, for example, the S&P 500 fell 2.8% but recovered within a couple of days.

The near-impeachment of Richard Nixon and impeachment of Bill Clinton, meanwhile, happened during epic bear and bull markets, respectively, that continued after the events.

Or think back to January 1992, when President George H.W. Bushfainted while having dinner with Japan’s prime minister. Rumors during U.S. market hours that he had died sent stocks down less than 1%. If the prospect of “President Quayle” didn’t do the trick, then investors can breathe easy about Mr. Trump’s legal travails.

Democrats may think that impeachment is a no-lose issue for them. Republicans did terribly at the polls in 1974 following Nixon’s resignation, though Democrats already were in charge in Washington. Republicans took some losses in 1998 following Clinton’s impeachment, but retained control of both houses of Congress and everything they had in this state.


T-minus 75 days and counting

A new Marquette Law School Poll of Wisconsin voters finds a tight race for governor following last week’s statewide primary elections. Among likely voters (that is, those who say they are certain to vote), incumbent Republican Scott Walker receives 46 percent, Democrat Tony Evers receives 46 percent and Libertarian Phil Anderson 6 percent. Only 2 percent say they lack a preference or do not lean to a candidate.

Among likely voters in the race for the Wisconsin U.S. Senate seat on the ballot in November, 49 percent support the incumbent, Democrat Tammy Baldwin, and 47 percent support Republican Leah Vukmir, while 3 percent say they lack a preference or do not lean toward a candidate.

Among all registered voters surveyed in the poll, the race for governor remains tight, with Walker at 46 percent, Evers at 44 percent and Anderson with 7 percent.

There is a wider margin among all registered voters in the Senate race, with Baldwin receiving 51 percent and Vukmir 43 percent.

Awareness of Evers and Vukmir has increased among registered voters since the last Marquette Law School Poll in July. Forty-six percent lack an opinion of Evers, down from 60 percent in July. For Vukmir, 48 percent lack an opinion now, compared to 66 percent in July.

Among likely voters only, 35 percent lack an opinion of Evers and 41 percent lack an opinion of Vukmir.

Evers is viewed favorably among 38 percent of likely voters and unfavorably by 27 percent. Among all registered voters 31 percent have a favorable view and 23 percent an unfavorable opinion.

Vukmir has a 30 percent favorable rating and a 29 percent unfavorable rating among likely voters while among registered voters 25 percent rate her favorably and 26 percent rate her unfavorably.

Few respondents lack opinions of the incumbents. Among all registered voters, 5 percent lack an opinion of Walker and 17 percent have no opinion of Baldwin. For likely voters, 4 percent have no opinion of Walker and 11 percent have no opinion of Baldwin.

Walker is viewed favorably among 49 percent of likely voters and unfavorably by 47 percent. Among all registered voters 49 percent have a favorable view and 45 percent an unfavorable opinion.

Baldwin has a 46 percent favorable rating and a 42 percent unfavorable rating among likely voters while among registered voters 43 percent rate her favorably and 40 percent rate her unfavorably.

The governor’s race results are similar to what the poll found at this point in the 2014 cycle. The August 2014 Marquette poll showed Democrat Mary Burke with a 2-point lead over Walker among likely voters, but Walker leading by about 3 points among registered voters.

All things considered, this is good news at least for Walker, and maybe for Vukmir too. Walker predicted last week he’d be behind in the first post-primary polls, but he’s not in the poll that is more credible than other polls.

That point about where Walker was four years ago is important as well. Four years ago voters didn’t know who Mary Burke was, but they came to discover her overstated involvement in her family business and other things that proved she wasn’t ready to be governor.

Four years later, Evers is going to have to explain a few things, such as what James Wigderson reports:

Americans for Prosperity is spending $1.8 million on an advertising campaign to remind voters Evers actually praised Governor Scott Walker’s last education budget before the schools superintendent decided to run for governor himself. Evers was for Walker’s budget before he was against it.

Thanks to his pro-growth policies, Governor Walker has invested millions in our schools and received a lot of praise:
A “pro-kid budget …” 
An important step forward …” 
“… Commitment for K-12 education is good news …”  
So who said those things? Tony Evers. 
But now that Evers if running for office, he’s trying to take back his praise.
The truth? Governor Scott Walker is improving Wisconsin education … and Tony Evers knows it.
Paid for by Americans for Prosperity. 
Not authorized by any candidate, candidate’s agent or committee.

Eric Bott, the state director of Americans for Prosperity in Wisconsin, commented on the flip-flop by Evers in a release announcing the ad buy.

“Tony Evers had it exactly right when he praised Governor Walker’s education budget as a ‘pro-kid budget,’ an ‘important step forward,’ and ‘good news,’” Bott said. “Now that he wants Scott Walker’s job, Evers is backpedaling so fast, I’m worried he’s going to end up in Minnesota before too long.”

There is concern over whether Walker could suck resources from other Republicans, specifically either Vukmir or Attorney General Brad Schimel, whose opponent should be elected if you believe in lawsuits for the sake of lawsuits instead of, you know, law and order.

More from the poll:

When asked the most important issue facing the state, 24 percent of registered voters pick jobs and the economy, 22 percent choose K-12 education and 19 percent say health coverage is their most important issue. No other issue reached double digits as “the most important,” although the condition of roads ranked fourth, with 9 percent of registered voters selecting it.

When voters were asked for their second-most-important issue, the condition of roads rose to the top three most-frequent answers, with K-12 education first at 18 percent, jobs and the economy at 17 percent, the condition of roads at 16 percent and health coverage at 15 percent.

I bet the economy number is actually bigger with voters. In fact, in my lifetime, every election has been decided by the economy, or more accurately voters’ perception of the economy. If voters think the economy is doing well, they vote for incumbents. If they don’t think the economy is doing well, they don’t vote for incumbents.

Fifty-three percent of Wisconsin registered voters see the state as headed in the right direction while 41 percent think the state is off on the wrong track. In July, 52 percent said right direction and 42 percent said wrong track.

Walker’s job approval among registered voters stands at 48 percent, with 45 disapproving. … Among likely voters, 50 percent approve and 47 percent disapprove.

All of this is generally in keeping with what was reported here last week — that among “swing” counties Walker is doing pretty well.

There is also this, though how it will affect this election is unclear, as pointed out by Facebook Friend Nathan Schacht:

More Dems than Republicans are against tariffs.
58% of Republicans think steel tariffs will help the economy, 9% of Dems think they will help.

On free trade, more Dems than Republicans think free trade agreements are a good thing:
45% of Republicans think they are good,
72% of Democrats think they are good.

So the Democrats are more conservative on trade issues now…good Lord.

I’m not sure “more conservative” is as correct as “more free-market,” except that Democrats are certainly not free-market on such other issues as education and health care. One wonders if Democrats have suddenly realized the virtues of free trade, or if Democrats are now free-trade because Trump isn’t. I think I know the answer by posing the question of whether Democrats have discovered the virtues of free markets in education and health care.


The media vs. Trump

Michael Goodwin:

This month marks the two-year anniversary of one of the most important articles ever written on journalism. On Aug. 7, 2016, after Donald Trump formally secured the Republican nomination and the general election was underway, New York Times media columnist James Rutenberg began with a question:

“If you’re a working journalist and you believe that Donald J. Trump is a demagogue playing to the nation’s worst racist and nationalistic tendencies, that he cozies up to anti-American dictators and that he would be dangerous with control of the United States nuclear codes, how the heck are you supposed to cover him?”

Under the Times’ traditional standards, the right answer is that you wouldn’t be allowed to cover any candidate you were so biased against. But that’s not the answer Rutenberg gave.

Instead, quoting an editor who called Hillary Clinton “normal” and Trump “abnormal,” Rutenberg suggested “normal standards” didn’t apply. He admitted that “balance has been on vacation” since Trump began to campaign and ended by declaring that it is “journalism’s job to be true to the readers and viewers, and true to the facts, in a way that will stand up to history’s judgment.”

I wrote then that the article was a failed attempt to justify the lopsided anti-Trump coverage in the Times and other news organizations. It was indeed that — and more, for it also served as a dog whistle for anti-Trump journalists, telling them it was acceptable to reveal their biases. After all, history would judge them.

Weeks later, Dean Baquet, the Times’ executive editor, told an interviewer the Rutenberg article “nailed” his thinking and convinced him that the struggle for fairness was over.

“I think that Trump has ended that struggle,” Baquet boasted. “I think we now say stuff. We fact-check him. We write it more powerfully that it’s false.”

Because the Times is the liberal media’s bell cow, the floodgates were flung open to routinely call Trump a liar, a racist and a traitor. Standards of fairness were trashed as nearly every prominent news organization demonized Trump and effectively endorsed Clinton. This open partisanship was a disgraceful chapter in the history of American journalism.

Yet the shocking failure of that effort produced no change in behavior. After the briefest of mea culpas for failing to see even the possibility of a Trump victory, the warped coverage continued and became the media wing of the resistance movement.

Which is how we arrived at the latest low moment in journalism. This one involved the more than 300 newspapers (including The Post) that followed The Boston Globe and, especially his accusation that they are “the ­enemy of the people.”

The high-minded among the media mob insisted they were joining together to protect the First Amendment and freedom of the press. In fact, the effort looked, smelled and felt like self-interest and rank partisanship masquerading as principle.

True to their habit, most of the papers expressed contempt for the president and some extended that contempt to his supporters.

Nancy Ancrum, the editorial-page editor of The Miami Herald, told Fox News her paper joined the effort without any hope of changing the minds of Trump supporters because “they are just too far gone.”

Imagine that — 63 million Americans are written off because they disagree with the media elite’s politics. Echoes of Clinton’s “deplorables” comment ring loud and clear.

I agree that Trump is wrong to call the media the “enemy of the people” and wish he would stick to less inflammatory words. His ­favorite charge of “fake news” makes his point well enough without any hint that he favors retribution on individual journalists.

But I am also concerned that media leaders refuse to see their destructive role in the war with the president. Few show any remorse over how the relentlessly hostile coverage of Trump is damaging the nation and changing journalism for the worse.

One obvious consequence is increased political polarization, with many media outlets making it their mission to denounce Trump from first page to last, day in and day out. Studies show 90 percent of TV news coverage is negative and the Times, Washington Post and CNN, among others, appear addicted to Trump ­hatred as if it is a narcotic.

This lack of balance permits little or no coverage of any of his achievements. How many people, for example, know about the employment records shattered by the jobs boom unleashed by Trump’s policies?

Black unemployment stands at 5.9 percent, the lowest rate on record. For Latinos, it is 4.5 percent, also the lowest on record. For women, it’s the lowest rate in 65 years and for young people, it’s the lowest since 1966.

Those statistics mean millions of people are getting their shot at the American dream. How can that not be newsworthy?

Rest assured that if Barack Obama had achieved those milestones, they and he would have been celebrated to the high heavens.

Yet when it comes to Trump, nothing is ever good. Having decided he is unfit to be president, most news groups act as propagandists, ignoring or distorting facts that contradict their view of him.

While media manipulation hurts Trump’s popularity, there is a second, ironic impact: The skewed coverage is doing even more damage to public trust in the media itself.

A Gallup/Knight Foundation survey of 1,440 panelists earlier this year found adults estimating that “62 percent of the news they read in newspapers, see on television or hear on the radio is biased” and that 44 percent of “news” is inaccurate.

Separately, Axios and SurveyMonkey polled nearly 4,000 adults in June and found that 70 percent believe mainline news organizations report as news things “they know to be fake, false or purposely misleading.”

Among Republicans and GOP-leaning independents, an astonishing 92 percent harbor that distrust, as do 53 percent of Democrats.

And get this: Two-thirds of those who believe there is rampant false news say it usually happens because journalists “have an agenda.” Clearly, the distrust is not limited to Trump supporters.

These numbers reflect an urgent crisis of confidence in the press. And it’s getting worse.

A Gallup survey three years ago found that 40 percent trusted the media; two years ago, the trust meter declined by 8 points, to 32 percent. Now even that low bar looks like the good old days.

Yet instead of soberly examining their conduct, most in the media ratchet up the vitriol, apparently believing that screaming louder and longer will lead the public to hate Trump as much as they do.

But as the surveys show, their bias is a boomerang. With media behavior undermining public trust more than anything Trump says or does, a return to traditional standards of fairness and a separation of news from opinion are essential.

Jeff Jacoby adds:

Last week more than 400 newspapers nationwide responded to a call by The Boston Globe to publish editorials in defense of freedom of the press, and to explain why the news media, far from being, in President Trump’s malicious phrase, the “enemy of the people,” is one of the foremost guarantors of the people’s liberty.

I’ve written about Trump and the press before, both to caution against an anti-Trump feeding frenzy and to warn of the danger in a presidential war against the press . Here I want to focus on something else — the notion, especially widespread on the right these days, that freedom of the press is for “unbiased” news coverage, not for journalism that is unfair or hostile to the president.

An Ipsos poll taken earlier this month found that 26% of Americans — and 43% of Republicans — believe that “the president should have the authority to close news outlets engaged in bad behavior.” In a Quinnipiac poll , also released this month, 26% of voters agreed that “the news media is the enemy of the people.” Among Republicans, an actual majority, 51%, agreed with that statement.

It is hard to overstate how radically un-American such views are. Public disenchantment with the press, and complaints by officials that the press treats them unfairly, are as old as the press itself. But whatever people think of the media, the question of their right to publish what they please was settled when the First Amendment to the Constitution was ratified in 1791: “Congress shall make no law . . . abridging the freedom of speech, or of the press . . .”

Nothing in the language of the Amendment makes freedom of the press contingent on objectivity, or popularity, or public approval. Such a condition would never have occurred to the Constitution’s framers, because the press in their day was anything but (to coin a phrase) fair and balanced. Newspapers made no pretense of detachment — quite the opposite.

In 1800, for example, Samuel Morse of Danbury, Conn., publisher of the Sun of Liberty newspaper, readily flaunted his support for Thomas Jefferson’s Democratic-Republican Party. He was opposed to the Federalists led by John Adams, and saw no need to hide the fact. “A despicable impartiality I disclaim,” he wrote. “I have a heart and I have a country — to the last I shall ever dedicate the first.”

By that point, the tradition of a freewheeling, no-holds-barred, decidedly partisan press was well-established. On my way to the Globe’s office each day, I pass the spot on Court Street in downtown Boston where James Franklin, the publisher of the New England Courant (and the older brother of Benjamin Franklin), had his printing presses. Franklin’s Courant got into a famous battle in 1721 with the Massachusetts Puritan leader Cotton Mather over the best way to treat smallpox, which was then ravaging the colony.

As Matthew Price wrote in a Globe essay in 2006, “Franklin made hell for Mather with a potent combination of slander and innuendo. Mather shot back that the Courant was a ‘Flagitious and Wicked Paper.’” (That was Puritan-speak for “fake news.”)

My point isn’t that the openly, even brutally, partisan press culture of the 18th and 19th centuries is better or worse than the ideal of journalistic impartiality that began to take hold during the Progressive Era early in the 20th century. It is that when the First Congress and the states enshrined in the First Amendment an adamantine prohibition on “abridging the freedom of . . . the press,” they were protecting the raucous, argumentative, ideological, often vicious journalism of their day. Freedom of the press, like freedom of speech, is meaningless if it only protects decorous messages and inoffensive expression that ruffle nobody’s feathers.

News organizations — and their customers — don’t need the Constitution to shield anodyne, noncontroversial journalism. If newspapers restricted themselves to printing stories that the president liked, what would be the point of newspapers? If Fox News or MSNBC broadcast commentary that challenged no one’s partisan preferences, what would be the point of watching?

“If there is any principle of the Constitution that more imperatively calls for attachment than any other, it is the principle of free thought,” wrote Supreme Court Justice Oliver Wendell Holmes Jr. in 1929. “Not free thought for those who agree with us but freedom for the thought that we hate.”

Only people profoundly and alarmingly ignorant of Americans’ constitutional liberties could believe that presidents should have the right to shut down publications “engaged in bad behavior.” The proper term for such “bad behavior” is a free press, and it is among the shining glories of America’s constitutional democracy.

If this were only true

Steve Levy (not of ESPN):

President Bill Clinton’s welfare reform required recipients to work as a prerequisite to a government check. It led to more Americans participating in the workforce and a remarkable reduction of the welfare rolls.

Taxpayers and the recipients themselves benefited.

But those tight work requirements were loosened considerably in the Obama years, as were the eligibility rules for disability claims. Both were at least partially responsible for the huge increase of people no longer in the workforce (up to 40 million in the 25 to 64 age bracket).

Fortunately, that trend is suddenly being reversed thanks to President Trump’s vibrant economy. The number of Social Security Disability (SSDI) applications this year is at the lowest rate in 16 years. Another positive trend is the new administration’s formulating of rules requiring work for Medicaid.

It’s about time.

With all the debate over the healthcare bills, little attention focused on how the explosion of Medicaid can fundamentally change the basic underpinnings of American society.

The media gushes over how millions of Americans now get health insurance thanks to the expansion of Medicaid. They fail to mention that once you become dependent on that program, rather than through an employer, you can be forever trapped by being on the dole. That means you become more concerned about keeping your eligibility for Medicaid, and the healthcare it bestows, than upon advancing on a career path with promotions, higher wages — or even getting a job in the first place.

Medicaid ballooned by $100 billion between 2013 and 2015, while food stamp rolls grew 36 percent in the decade prior to the Trump administration.

Simultaneously, workfare requirements were being gutted.

Even further overlooked is the fact that Supplemental Security Disability Income had grown from 4.3 million in 1990, to 6.7 million in 2000, to 8.6 million today. This left us with one in 19 Americans collecting a disability check while not being fully employed.

Did the American workplace suddenly get infinitely more dangerous over the last 20 years? Hardly. Our work conditions have never been safer.

In 2013, former Sen. Tom Coburn, R-Okla., through a Homeland Security and Governmental Affairs Committee report, exposed the fact that many residents in West Virginia waited for their 99 weeks of unemployment to expire in the midst of the Great Recession, only to turn around thereafter and apply for disability benefits.

Remarkably, 15 percent of the state’s population was on disability. It’s emblematic of an explosion of an underclass that could forever be dependent on a government check and lose all incentives to rejoin the workforce.

While no one was looking, lawmakers quietly liberalized provisions that opened the floodgates for mere stress or back pain to be a qualifier for disability benefits. These categories are among the fastest growing in the system.

How many of us over 40 don’t have stress or back pain?

1.3 million additional recipients were added during the Obama years through 2015, due to an expediting of the administrative process that overwhelmingly sided with the applicant.

The nonpartisan National Bureau of Economic Research (NBER) noted that rules were changed to allow for more weight on self-reporting, relaxed screenings of mental illness, and the accepting of medical evidence from the applicant’s own doctor — while no taxpayer advocates were involved in the process.

Those on disability also qualify for Medicare. And because the Feds foot the whole disability bill, while only providing 50 percent of many Social Services costs such as food stamps, at least one state,Missouri, was actually paying a consultant (Public Consulting Group) to move people from their welfare rolls and onto disability.

As Chana Joffe-Walt wrote in her staggering article for NPR’s “Planet Money,”  ” . . . disability has also become a de facto welfare program for people without a lot of education or job skills.” Her report further indicated that, “Once people go onto disability, they almost never go back to work.”

Perhaps, until now.

The tax cut plan and its resulting kick-start to the economy has boosted job opportunities and consumer confidence. Greater hope equates to greater motivation. Add to that an increase individual dignity by tying benefits to a requirment to work.

The administration should go further to require that anyone on disability, who has not lost his limbs or eyesight, or isn’t undergoing treatment for a terminal disease, report to an employment site established by local government and be given a job — even if it is filing papers.

Pay these individuals the same they get right now. While there won’t be direct savings there, a massive amount will be saved by weeding out fraudulent applicants.

Since those applicants have to report to a designated location 40 hours a week anyway, we’ll see how fast they say their stress isn’t all that bad and perhaps they can do their old job, and get paid by their employer, rather than the taxpayer.

One reason I’m skeptical about this is, as employers can tell you, merely having a body in the office doesn’t exactly help the business. It’s hard to imagine a less motivated employee than someone who has already been a malingerer due to his or her stated disability that prevents them, or so they claim, from doing any work at all.

Those of us who work 40 or more hours a week to support those who work zero hours per week deserve this much.


Politics, the media and “common ground”

Margaret Sullivan:

Ken Doctor saw it coming. A few years ago, the media analyst looked at the trend lines and predicted that by 2017 or so, American newsrooms would reach a shocking point.

“The halving of America’s daily newsrooms,” he called what he was seeing.

Last week, we found out that it’s true. A Pew Research study showed that between 2008 and last year, employment in newspaper newsrooms declined by an astonishing 45 percent. (And papers were already well down from their newsroom peak in the early 1990s, when their revenue lifeblood — print advertising — was still pumping strong.)

The dire numbers play out in ugly ways: Public officials aren’t held accountable, town budgets go unscrutinized, experienced journalists are working at Walmart, or not at all, instead of plying their much-needed trade in their communities.

One problem with losing local coverage is that we never know what we don’t know. Corruption can flourish, taxes can rise, public officials can indulge their worst impulses.

And there’s another result that gets less attention:

In our terribly divided nation, we need the local newspaper to give us common information — an agreed-upon set of facts to argue about.

Last year when I visited Luzerne County in Pennsylvania to talk to people about their media habits, I was most struck by one thing: The allegiance to local news outlets — the two competing papers in Wilkes-Barre, and the popular ABC affiliate, WNEP, or Channel 16 as everyone called it.

The most reasonable people I talked to, no matter whom they had voted for, were regular readers of the local papers and regular watchers of the local news. (The county was one of those critical places that had voted for President Obama in 2008 and 2012, and flipped red to Trump in 2016.)

By contrast, those residents who got news only from Facebook or from cable news were deep in their own echo chambers and couldn’t seem to hear anything else.

Last week, President Trump, at his rally in Wilkes-Barre, again trashed the national media — to the crowd’s delight. But I would guess that many of the attendees would give a pass to their local media sources.

After all, the reporters and editors for those news outlets might send their kids to the same schools, shop at the same Dollar General, fill up their gas tanks at the same Sheetz.

When he made his prediction in 2015, Ken Doctor noted that the largest and the smallest of the nation’s newspapers seemed to have some immunity.

Tiny papers have little competition, an enduring connection with their towns, and thus still are able to attract advertising and reader loyalty. The largest of the papers — including the New York Times and The Washington Post — are finding new ways to support themselves with a combination of digital ad dollars and subscriptions, among other revenue sources.

But the regional papers, such as the Denver Post, have taken the worst hits. And to make matters worse, many are owned by hedge funds that couldn’t care less about journalism. They are only interested in bleeding the papers dry of whatever remaining profits they can produce with ever-shrinking staffs.

“Will hitting the halving point finally send a signal of news emergency?” Doctor asked. And he answered himself: “Probably not. Who would send it? Who would receive it? What does any citizen/reader feel he or she can really do about it?”

That’s the rub. What’s more, as papers decline, there’s less reason to subscribe because coverage isn’t what it used to be.

“We’ve had to make some tough decisions,” Ken Tingley, editor of the Glens Falls Post-Star, a Pulitzer Prize-winning daily in the Adirondacks region of New York, told me recently. With his staff down by about half, he has pulled in the news coverage from a far-flung region to concentrate on just the metro area.

What he worries about most, Tingley said, is that there’s not much of a career ahead for the young reporters on his staff.

“Where are they going to go?” he said, when bigger metro dailies keep shedding reporters like so many autumn leaves. (One recent example: The New York Daily News, which halved its newsroom.)

To be sure, the picture isn’t entirely bleak: Nonprofit news organizations spring up, relying on grants and membership; organizations such as Report for America help fill the gaps at shrunken news organizations; and in Denver, a new outfit called Civil is funding an alternative to the decimated Post with the digital Colorado Sun, and hopes to produce many more like it. Some regional papers have been bought by well-meaning philanthropists.

But you can’t argue with the numbers, or the crisis.

Yes, the emergency signal has gone out, if too faintly, and there is a response.

But I’m afraid it won’t be nearly enough to make up for what’s lost. And in a deeply divided America, that’s a tragedy.

After 30 years in journalism, I can conclude that, first, reporters shouldn’t work for publicly traded media companies, since they are driven by the imperative of maximizing shareholder returns. That’s good if you’re a shareholder. (Which, at a minimum through 401K accounts, at least half of U.S. families are.) It’s not so good if you work there and the company has a bad quarter. (As you know, I write from experience about this.)

Beyond that, some decry the increasing chain ownership of media outlets. That, however, is not a blanket statement one can really make. There are good media companies and bad media companies, and there are good family-owned media outlets and there are bad family-owned media outlets.

To believe that the media is or should be immune to the laws of economics is naive. The medias biggest financial problem is increased competition for its top source of revenue, advertising. When profit margins shrink or disappear, business decisions are made.

The biggest problem with this, though, is the assumption there is common ground in our society today. Where? In what? And why is it the media’s job to reinforce it? The media is supposed to report the news, without fear or favor, and without a reporters opinion.

Media cause and government effect

Robert Gebelhoff of and in the Washington Post:

Nowadays, if you want to be an incompetent — or even corrupt — elected official, there’s a place for you to work where the risk of facing recourse is fast getting smaller: local government.

That’s because so few people are paying attention. Not only has voter participation in local elections fallen to dangerously low levels, but the health of local newspapers, traditional watchdogs for the most direct and abundant form of government in the United States, has also been deteriorating.

This is a crisis for democracy in general. But politically speaking, the Republican Party — yes, the same party whose leader derides the media as “fake news” and “the enemy of the people”  — should be particularly alarmed. Because if conservatives are concerned about keeping government as efficient and local as possible, they need the hundreds of local newspapers to make the system work across the country.

Researchers have illuminated a sort of symbiotic relationship between local papers and the governments they cover. The governments provide papers with content to fill their pages; the papers, in turn, offer a healthy level accountability and make information more accessible among the electorate. If a newspaper is suddenly forced to close due to economic forces — for example, if competition from online advertising sites suddenly dries up its revenue — the government, too, becomes sick.

This isn’t just theoretical; it translates to hard dollars and cents, as illustrated by a new paper, presented this week at the Brookings Institution’s Municipal Finance Conference.

The paper, which is in the process of being peer-reviewed, looked at newspaper closures between 1996 and 2015 and found that once a newspaper goes under, it becomes more expensive in the long run for its local government to borrow money. In the three years following a closure, the study found, municipal borrowing costs for counties where newspapers closed increased by .05 to .11 percentage points. That might not sound like a lot, but when we’re talking about borrowing millions of dollars, it’s nothing to sneeze at.

Authors of the paper theorize that this is the result of less information being publicly available, resulting in poorer-quality governance. And as a result, local investors in such communities are more likely to see municipal bonds as risky, driving up interest rates.

Before you say “correlation is not causation,” consider the strong evidence that the link between newspaper closures and higher borrowing costs is causal. First, the authors compared counties where newspapers closed to neighboring counties with operating newspapers. On average, the counties where newspapers folded had bond yields that were .07 percentage points higher.

The effect was also dependent on the number of papers covering a government. Counties with multiple papers saw no significant effect if one of their papers went under. But counties with only one paper that closed did.

In fact, the authors were able to track this effect on rising borrowing costs with the expansion of Craigslist. The advertising website, which drained local newspapers of revenue from classified ads, was gradually rolled out across the country over time. They found that Craigslist-induced newspaper closures increased municipal bond yields by .04 to .06 percentage points.

All of this is to say that the health of local newspapers is intensely connected with government efficiency. And it’s not just bond markets. Newspaper closures are also linked to rising wages for government employees and to growing numbers of government employees per capita in a county. Other research shows that elected officials from areas with little local media coverage are less responsive to their constituents.

For conservatives who say they want as much government responsibility allocated to state and local governments as possible, these trends should be terrifying. We can only support a federalist political system if it is well oiled at each level, and local reporting is an invaluable grease for the machine to function.

There’s no easy solution to the decline of local newspapers. Market forces are fundamentally changing the media landscape, and it remains to be seen what will happen to small outlets that can’t so easily transition online. But one thing is for sure: The decline of the local free press is a threat to the decentralized system of government envisioned by the Founding Fathers.

That is an interesting study conclusion if it’s correct.

That study was reported last week. Earlier this week came this news reported by the New York Times:

The meeting lasted less than a minute. By the time it was over, reporters and editors at The Daily News, the brawny New York tabloid that was once the largest-circulation paper in the country, learned that the newsroom staff would be cut in half and that its editor in chief was out of a job.

In the hours that followed, journalists in various departments, from sports to metro, received formal notification that they had been laid off by Tronc, the media company based in Chicago that bought the paper last year.

“People were crying and hugging each other,” said Scott Widener, a researcher who had worked at The News since 1990. “I’ve dodged a lot bullets over the years, and I just couldn’t dodge this one.”

In its heyday, The News was a staple publication of the city’s working class, an elbows-out tabloid that thrived when it dug into crime and corruption. It served as a model for The Daily Planet, the paper that counted Clark Kent and Lois Lane among its reporters, and for the scrappy tabloid depicted in the 1994 movie “The Paper.”

With Tronc’s firing of more than 40 newsroom employees — including 25 of 34 sports journalists and most of the photo department — The News joins the ranks of walking-wounded papers at a time when readers have gravitated toward the quick-hit convenience of digital media.

Under Jim Rich, the editor who lost his job on Monday, The News positioned itself as an unapologetically liberal counterpuncher to Rupert Murdoch’s New York Post. Mr. Rich, who declined to comment for this article, transformed the front page — “the wood,” in tabloid parlance — into a venue for criticizing and often ridiculing President Trump.

Last Tuesday, The News commemorated the president’s appearance with President Vladimir V. Putin of Russia in Helsinki, Finland, with the headline “Open Treason.” Beneath the bold black letters was a cartoon of Mr. Trump holding hands with a shirtless Mr. Putin; with his other hand, Mr. Trump was firing a pistol at Uncle Sam’s head.

Hmmm. Ridiculing Trump. How has that worked out?

Tronc announced on Monday that Mr. Rich’s replacement would be Robert York, a media executive who has spent most of his career in San Diego. In 2016, Tronc named Mr. York the editor and publisher of The Morning Call, a newspaper owned by the company in Allentown, Pa.

The layoff did not come out of nowhere. The News has lost millions of dollars as it struggled to replace the revenue once reliably provided by the advertisements that fattened its papers and the readers whose morning routines included a stop at the newsstand.

“The web kind of changed the DNA of every paper,” said Joel Siegel, a former managing editor at The News who is now managing editor of the cable news channel NY1.

Grant Whitmore, an executive at Tronc, presided over the brief meeting, which took place shortly after 9 a.m. in the paper’s seventh-floor newsroom in Lower Manhattan. About 50 staff members were in attendance, a group that did not include Mr. Rich or Kristen Lee, the managing editor, who was also laid off.

Afterward, human resources workers delivered the bad news to employees, including the sports columnist John Harper, the arts reporter Joe Dziemianowicz and the City Hall reporter Erin Durkin.

“I firmly believe that today’s actions will position The Daily News for growth in the years ahead,” Mr. Whitmore said in a memo to the remaining staff members at the end of the day, “and I look forward to working with this group to capture the opportunities in front of us.” He added that Tronc remained “committed to print.” …

It is hard to fathom what the paper’s next issues will look like, given that the newsroom had shrunk significantly under its previous owner, Mortimer B. Zuckerman, the New York real estate developer and media mogul who bought the paper out of bankruptcy in 1993.

Ambitious projects like the series on New York Police Department’s abuse of eviction rules — for which The News shared a Pulitzer Prize with ProPublica in 2017 — would seem difficult to pull off with an even smaller staff. Sarah Ryley, the editor of the series, who left The News last year, said it had taken three years to complete because reporters and editors were stretched thin after the layoffs under Mr. Zuckerman.

“You used to go into the office and feel the energy,” said Frank Isola, a sports columnist at The News for nearly 25 years, who was among those laid off on Monday. “I’ve probably been in the office, I would say, maybe three times in the last three years. People tell me: ‘Don’t come in. It’s depressing.’”

Since Tronc bought the ailing tabloid from Mr. Zuckerman in September 2017 — for a reported $1; yes, one dollar — the company has been working to transform The News into something more digital.

“But we have not gone far enough,” the company said in a memo to the staff that announced its decision to reduce “the size of the editorial team by approximately 50 percent” and to shift its focus to breaking news.

Some News employees started packing last week, after the media newsletter Study Hall reported that the company planned to lay off a large portion of the staff.

Although daily print circulation had sunk to roughly 200,000, Mr. Rich breathed new life into the paper. During two stints as editor — a 13-month run that ended in 2016, and an encore that began in January — he regularly published front pages that captured the staccato energy of social media.

He was typically combative in a Twitter post on Monday: “If you hate democracy and think local governments should operate unchecked and in the dark, then today is a good day for you,” he wrote. Mr. Rich also dropped the Daily News affiliation from his Twitter bio. “Just a guy sitting at home watching journalism being choked into extinction,” it reads.

The News had a digital reach of 23 million, but it wasn’t enough. The challenge of wringing profits from page views has eluded much of the industry, and the paper proved unable to end its losing streak. According to securities filings, it lost $23.6 million in 2016. Since then, its business has continued to suffer.

In naming Mr. York as the replacement for Mr. Rich, Tronc is following a playbook that did not have success at The Los Angeles Times, when, in similar fashion, it gave the job of top editor to an outsider with a business background.

Lewis D’Vorkin, an executive at Forbes Media who specialized in broadening the company’s native-advertising offerings, was Tronc’s choice for the Los Angeles job. The newsroom greeted his appointment with skepticism, and Mr. D’Vorkin lasted two months in the role. After tensions between the newsroom employees and Tronc continued, the company sold the paper to Dr. Patrick Soon-Shiong in February for $500 million.

The longtime home of the columnists Jimmy Breslin, Dick Young and Liz Smith and the cartoonist Bill Gallo, The News reveled in its role as the voice of the average citizen. Etched into the stone above the entrance of its former home, the Daily News Building on East 42nd Street, is a phrase attributed to Abraham Lincoln: “God must have loved the common man, he made so many of them.”

“You used to see everybody reading the newspaper on the subway,” said Michael Daly, a onetime News columnist who now writes for The Daily Beast. “The News was the right size. It was the perfect size for the biggest city.”

“You used to see everybody reading the newspaper on the subway,” said Michael Daly, a onetime News columnist who now writes for The Daily Beast. “The News was the right size. It was the perfect size for the biggest city.”

One of its most famous headlines — “Ford to City: Drop Dead,” from 1975 — summed up President Gerald R. Ford’s refusal to send federal aid to a city on the verge of bankruptcy. Ford later said the headline had played a role in his losing the 1976 presidential election.

The News, winner of 11 Pulitzers in its 99-year history, underwent a crisis when 10 unions walked off the job in 1990. The Tribune Company, its owner since its founding in 1919, threw the paper into bankruptcy at the end of the long strike — and the man who rescued it, the British mogul Robert Maxwell, became tabloid fodder himself when his body was found floating near his yacht soon after he entered the New York media fray.

Mr. Zuckerman took control in 1993, but times were hard, even then, well before digital media threatened the business model that had produced newspaper barons, star columnists and city reporters with steady paychecks. Before rolling out the first issue under his ownership, Mr. Zuckerman laid off 170 employees. It was a sign of layoffs to come, as a bustling newsroom morphed into a workplace populated with a bare-bones staff of fewer than 100 on his watch.

You will not believe! what the Washington Examiner reports what happened next:

New York Gov. Andrew Cuomo, a Democrat, said he would put state resources behind the New York Daily News if it will help curb mass layoffs that reportedly just hit the left-leaning tabloid’s newsroom.

Cuomo said in a statement Monday that the state “stands ready to help” after the New York Times reported that the tabloid’s reporting staff would be reduced by about half.

“The Daily News, now owned by Tronc, Inc., is apparently firing a major portion of their reporting staff,” he said. “This will undoubtedly devastate many households and hurt an important New York institution and one of our nation’s journalism giants. These layoffs were made without notifying the state or asking for assistance.”

I was unaware that Mario Cuomo had bailed out the Post. That was a horrible idea, and bailing out a media outlet with government money is a hideous idea.

Little Cuomo’s tweet provoked these responses:

  • Governor offers to rescue a friendly media outlet. Doesn’t that muddy the concept of a free press?
  • I guess he thinks it’s a state-run media outlet and the state will decide whether to lay people off or use taxpayer money to prop up a failing political propaganda machine.
  • So former Gov Mario Cuomo “came to the aid of the New York Post when it was facing difficult financial times.” Huh. I’m SURE that didn’t affect their objectivity at all when it came to covering Cuomo, his admin, or Democrats in general.
  • You want state-run news? This is how you get state-run news. Your ideals are not ideals if you can’t apply them across the board (or aisle); they’re just additions to the hypocrisy of which there’s already enough.
  • government money mixing with the media–what could possibly go wrong?