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Haiti

Latin America and the Caribbean

World

Accord or Discord? Political agreement eases tensions, but crisis persists

The following has been cross-posted from the Haiti Elections Blog. The agreement itself can be found at the original source. 

Update: Jocelerme Privert has been elected provisional president by the National Assembly.

President Michel Martelly managed to reach a political accord with the heads of Haiti’s parliament on the creation of a transitional government, averting a potentially dangerous political vacuum. In keeping with the deal, Martelly stepped down on February 7, meeting a major demand of his opponents. But the accord also gives a great deal of power to a contested Parliament and fixes a time frame for the transition that would appear to rule out any real investigation of fraud in the previous rounds of elections. With pro-Martelly members of Haiti’s disbanded military (FAdH) on the march, the spectre of another, more violent round of political unrest hangs over the agreement. Given the accord’s many ambiguities and contradictions, Haiti’s electoral crisis has yet to be solved.

The deal’s text, entitled “Political Accord for institutional continuity upon the end of the term of office of the President of the Republic and in the absence of a President-elect and for the continuation of the 2015 electoral process,” was finalized at 1am on Friday night, after 28 meetings between various actors. President Martelly, Senate President Jocelerme Privert and Chamber of Deputies President Chancy Cholzer signed at the National Palace on Saturday, February 6. The solution found by the Executive and the lawmakers was “inspired by constitutional dispositions” rather than directly derived from the Haitian Constitution, because the Constitution did not clearly indicate what was supposed to happen when a president’s term ended without an elected successor in place.

The political accord confirmed Martelly’s departure on the constitutionally mandated end of his term on February 7 and provided a roadmap for the establishment of a provisional government. A provisional president will be elected by the National Assembly (a joint body of the Chamber of Deputies and the Senate) within five days of the signing of the accord, while executive power will be exercised in the interim by current Prime Minister Evans Paul and the Council of Ministers. Parliament has already established a bicameral committee to receive and vet applications for the post, and if all goes well, a provisional president will be sworn in on February 14. The mandate of the provisional president is limited to a maximum of 120 days, starting from the day they assume office.

The provisional president is tasked with “redynamizing” the currently “dysfunctional” CEP and finding a “consensus” Prime Minister. To do so, the political accord gives the provisional president the responsibility to establish a broad consultation process with Haitian society and the two Chambers of parliament mandate is find a consensus Prime Minister, who will then form a government and be confirmed by Parliament. Although not stated in the accord’s text, the New York Times reported that Martelly had made “an important concession” during the negotiations, agreeing to allow a member of an opposition party to be selected as interim president.

The provisional president is also called on to convoke the various social sectors to delegate new representatives (or confirm existing ones) to the CEP. At present, the CEP has only three of nine members, meaning it lacks the necessary two-third quorum for publishing electoral results. Just as important, the credibility of the current CEP has been badly eroded by corruption scandals and its complicity in Martelly’s efforts to ram through fraudulent elections despite strong opposition.

Once in place, the “redynamized” CEP will ensure the “continuation of the electoral process initiated during 2015,” according the agreement. The steps to be taken include the implementation of the “technical recommendations” of the Evaluation Commission and the finalization of municipal election results, followed by the organization of “second round of presidential elections, partial legislative elections, and local elections.” The accord fixes April 24 as the date for these elections, with final results proclaimed on May 6 and an elected president installed on May 14. Many commentators, including Senate President Privert, have pointed out that this calendar is only tentative, since only the CEP has the authority to officially set election dates.

Although the political accord’s signatories claimed to be “seeking a broad consensus of all vital forces of the nation,” support for the agreement was not unanimous. Almost immediately after it was signed, the deal was denounced in the streets by opposition protesters. The Group of Eight (G-8) characterized the agreement as “anti-popular and anti-democratic” and the Front du Refus et de la Résistance Patriotique, a grouping of political and civil society leaders, which called the deal “stillborn.” The G-30, another grouping of presidential candidates, announced that it will challenge the political accord’s legality. These critics charged that the deal did not taken into account a sufficiently wide range of perspectives. Senate President Jocelerme Privert admitted that some opposition lawmakers disagreed with the accord reached by Martelly and legislators, but Privert said they would have to accept the majority's decision. “This is the democratic way,” he said. Some pro-Martelly legislators have also expressed discontent with the deal.

Jake Johnston / February 16, 2016

Article Artículo

Government

Health and Social Programs

Robert Samuelson’s Candor Deficit

Robert Samuelson really, really wants to cut Social Security and Medicare and he is not going to let the data get in the way. His column today complains about the lack of straight talk on the budget. He calls for candor when discussing the budget. Unfortunately he resists this standard himself.

The argument is the usual, rising Social Security and Medicare spending are going to crowd out other areas of the budget. As he tells us:

“The basic conflict posed by the budget is not between rich and poor but between workers and retirees. Present policy favors retirees over workers — the past over the present and future — because, politically, tampering with benefits is off-limits. The rest of government absorbs the fiscal consequences of an aging population.”

Okay, let’s inject a little straight talk and candor into Samuelson’s discussion. First, he tells us that he wants to free up money for other programs by:

Dean Baker / February 14, 2016

Article Artículo

Ross Douthat Has Trouble Remembering the 1990s

Ross Douthat used his NYT column to remind progressives of the 1990s and harangue them for not wanting them back. While he gets some of the points right, he misses a really big one: the 1990s prosperity was driven by a stock bubble, which would inevitably burst. Furthermore, Clinton’s policies lead to an over-valued dollar and a large trade deficit that persists to this day. This trade deficit has made it impossible to get to full employment without an asset bubble.

Just to briefly recount the good stuff, we saw the unemployment rate fall to 4.0 percent as a year round average in 2000. In the early and mid-1990s the consensus within the mainstream of the economics profession was that the unemployment rate could not get much below 6.0 percent without sparking inflation. 

The low unemployment rate disproportionately helped those at the bottom. This was the only period in the last forty years in which workers at the middle and bottom of the wage distribution saw sustained gains in real wages. African Americans were actually closing the earnings gap with whites and women were reducing the earning gap with men. 

Dean Baker / February 14, 2016

Article Artículo

Economic Growth

Going Negative: What it Means for the Fed

Neil Irwin had an interesting NYT Upshot piece on the use of negative interest rates by central banks as a way of boosting demand. There are three points worth adding to this discussion.

First, the Fed has other tools to try to boost the economy. The obvious one is to explicitly target a long-term interest rate. For example, the Fed could say that it will push the 5-year Treasury note rate down to 1.0 percent. It would then buy enough 5-year notes to bring the rate down to this level.

Since longer term rates have much more impact on the economy than short-term rates, this would more directly affect the economy than trying to bring down long-term rates with lower short-term rates. If the Fed was really concerned about inadequate demand in the economy, it is difficult to see why it would not consider this sort of targeting. For some reason targeting long-term rates has not featured in discussions of potential Fed actions.

Dean Baker / February 13, 2016

Article Artículo

Economic Growth

Workers

During the Recession, Voluntary Job Quits Declined the Most for Blacks

Job Leavers as Share of the Unemployed

The figure above shows the percentage of unemployed Americans who quit their last job, by race. For all groups, the share of job quitters took a nosedive during the recession; this is to be expected, because a low rate of job quitting is actually a sign of a weak labor market. When workers feel that there are few job opportunities available to them, they are less likely to quit their jobs, because they know that they are unlikely to find a new one. By contrast, when the economy is strong and the job openings rate is high, we see more workers leaving their jobs:

CEPR and Nicolas Buffie / February 12, 2016

Article Artículo

Wall Street

Paul Krugman, Bernie Sanders, and the Fed

Paul Krugman used most of his column this morning to take some well-aimed shots at the Republican presidential contenders and congressional leadership. He points to their hostility to the Federal Reserve Board’s efforts to boost the economy because of fears of hyper-inflation. These fears have been shown to be completely ungrounded, as inflation continues to be far lower than the Fed’s target of 2.0 percent.

However, Krugman also takes a shot at Senator Bernie Sanders for supporting a bill to audit the Federal Reserve Board’s conduct of monetary policy. There are two points worth making here.

First, an outcome of an earlier version of this bill was an amendment to Dodd-Frank which required the Fed to disclose the beneficiaries of the loans from the special lending facilities it created at the peak of the crisis. At the time, the Fed was insisting that beneficiaries and the terms of the loans had to be kept secret.

Dean Baker / February 12, 2016

Article Artículo

David Brooks Doesn’t Like Bernie Sanders or Northern Europe

David Brooks used his column today to tell readers how Bernie Sanders' programs would destroy the dynamism of the U.S. economy. I don’t have time to go through the whole story, but it is important to make one point.

Brooks complains that Sanders' agenda would raise total spending at all levels of government from the current 36.0 percent to 47.5 percent. He argues this would require higher taxes on most people thereby depriving them of the freedom to spend their own money as they see fit.

Dean Baker / February 12, 2016

Article Artículo

Financial Transaction Tax

Will Sanders’ Financial Transaction Tax be a Free Lunch for Those Who Don’t Live on Wall Street?

Morning Edition had a good piece this morning on Senator Bernie Sanders’ proposal for a financial transactions tax (FTT). There are a couple of additional points worth making.

First, while the piece noted a wide range of estimates of the amount that could be raised through such a tax, we do have some real world experience. As was noted, the United Kingdom has had a transactions tax on stock trades since the 17th century. This tax raises an amount equal to roughly 0.2 percent of GDP, which would be $36 billion annually in the current U.S. economy or roughly $400 billion over a 10-year budget horizon. This tax applies only to stocks, which allows traders to avoid it through options and other derivative instruments.

Dean Baker / February 12, 2016

Article Artículo

Strike Three for the Congressional Budget Office? Social Security Retirement Income Projections

Yesterday the Congressional Budget Office (CBO) corrected an error that it made in projecting the share of earnings that will be replaced by Social Security for those nearing retirement. In a report published last fall, CBO projected that for people born in the 1960s, the annual Social Security benefit for those retiring at age 65, would be 60 percent of their earnings for middle income retirees and 95 percent of earnings for those in the bottom quintile. The correction showed that benefits would replace 41 percent of earnings for middle income retirees and 60 percent of earnings for those in the bottom quintile.

This mattered a great deal because the originally published numbers were quickly seized upon by those advocating cuts in Social Security benefits. For example, Andrew Biggs, who served in the Social Security Administration under President George W. Bush, used the projections as a basis for a column in the Wall Street Journal with the headline “new evidence on the phony retirement income crisis.” The piece argued that benefits were overly generous and should be cut back, at least for better off retirees. (To his credit, Biggs quickly retracted the piece after CBO acknowledged the mistake.)

While this was a serious error, unfortunately it was not the first time that CBO had made a major error in an authoritative publication. In 2010, in its annual long-term budget projections it grossly overstated the negative effect on the economy of budget deficits. The 2010 long-term projections showed a modest increase in future deficits relative to the 2009 projections, yet the impact on the economy was far worse.

The 2010 projections showed a drop in GDP of almost 18 percent by 2025, compared to a balanced budget scenario. This was more than twice as large as the impact shown in the prior year’s projections. The sharp projected drop in GDP could have been used to emphasize the urgency of deficit reduction. As was the case with the recent Social Security projections, CBO corrected its numbers after the error was exposed.

Dean Baker / February 12, 2016

Article Artículo

Workers

The Case for Paid Family Leave

This week D.C. will hold another hearing on a proposal for Paid Family Leave, in line with states like New Jersey, California and Rhode Island that have implemented paid family leave programs over the last decade. In this election cycle, a major point of political discourse among Democrats has been that America is still one of the only developed countries that has not established a paid leave program to provide income for workers during family or medical leaves. However, the case for federal paid leave has been gaining momentum for the several years; that would fix many problems with the current system of unpaid leave that keep workers from taking care of family members, bonding with a new child, or taking care of serious medical illnesses.

CEPR and Rynn Reed / February 10, 2016