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Behind Frenemy Lines - May 10, 2014, by Jason Stanford - This is a typical day for Greg Abbott’s gubernatorial bid: He goes into the office, screws up his own campaign and goes home. If it weren’t for his mistakes—Ted Nugent, thanking a supporter who called Wendy Davis “retard Barbie”, calling South Texas a “Third-World Country”, and his bungled opposition to equal pay come to mind—Abbott would seem to have no campaign at all. But it’s when you separate the wheat from the gaffe on education that Abbott’s campaign looks like a disaster waiting to happen.

The negative coverage of Abbott’s education plan—and boy howdy has there been a lot—is focused on Abbott’s mistakes. His education plan cites Charles Murray, whose retrograde views on race and gender got him called a “White Nationalist” by the Southern Poverty Law Center. On page 20, his plan calls for “standardized tests” in pre-K. As a dodge, his campaign spokesmanclaimed that was in the plan “for informational purposes only.” And then he cancels campaign events at public schools when the Davis campaign points out that the schools are suing him over funding cuts.

But behind this façade of denials, backpedaling, and obliviousness sits the luckiest man in American politics, because almost no one has bothered to discuss his idea to create “takeover districts” for low-performing schools. He has reportedly modeled his plan on the privatization reforms in New Orleans.

That last bit should scare you. Education reformers—that is, those who think private charters would do better than public schools at educating poor children—call the Recovery School District in New Orleans a success. If the RSD is a success, I’m the third baseman for the Baltimore Orioles. No matter how much I wish that to be true, the facts say otherwise. Here’s why:

No one argues that schools in New Orleans were turning out Harvard scholars by the boatload, so the legislature created the RSD, a takeover district as Abbott has conceived. Davis also supports recovery districts, but Abbott likes the New Orleans model in which “failing” schools would be run by private charters that promised to get the schools shipshape and back into the public school system within five years.

Before taking a look at the results, we must first figure out what “failure” means, because they keep moving that target. RSD used to takeover any school that failed to get a passing score of 60 on the state performance index. After Katrina, the legislature changed that to allow RSD to scoop up any school that fell short of the state’s 87.4 average. The New Orleans private charter district took over 94 schools, 26 of which met the old passing standard. The state redefined failure to mean below average so more schools could get privatized.

Almost a decade later, the takeover district in New Orleans has failed to turn around even one school, so “improvement” became the new goal. Not one school has received an “A” or even a “B” grade. In fact, RSD stopped disclosing the grades their schools received, preferring to publicize percentages of improvement without disclosing the underlying data or that they were cherry-picking the data every year, making it impossible to honestly chart progress. By their original standards, though, all the RSD schools are still failing.

Remember, Louisiana was throwing millions of tax dollars at what were essentially startup small businesses. Fraud and bankruptcy are commonplace, and if you think that’s confined to New Orleans, think again.

Integrity in Education and the Center for Popular Democracy looked at 15 states that have charter schools, one of which was Texas and found “rampant fraud, waste and abuse,” according to a report released last week. The two groups found numerous cases of embezzlement, misuse of tax dollars, child endangerment, bilking taxpayers for services not rendered, inflated enrollment numbers, and general mismanagement. Private charters are running schools like a business. Unfortunately, that business is Wall Street.

It’s never the schools in the wealthy neighborhoods that get taken over. On average, poor children score worse than their wealthier peers. We have always known that, but we cannot get poor children to achieve in school simply by insisting they act like wealthy children.

Now Abbott is using the false dogma of education reform as cover to give up on public schools. Giving up on public schools will not fix public schools, but if Abbott becomes governor, he’ll go into the office every morning, screw up public schools, and go home.

Don’t say you weren’t warned.

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Jamie Dimon said JPMorgan Chase & Co. will look into investors’ concerns about whether the bank should continue to help finance private prisons.

The chief executive officer came under fire Tuesday at the company’s annual meeting for the bank’s role in financing debt for companies including the Geo Group Inc. and CoreCivic Inc., which operate privately-owned prisons and immigrant detention centers. Some investors and protesters urged JPMorgan to end its relationship with such firms, arguing that they make money off human suffering and violate immigrants’ rights.

Read the full article here.

The chants of vocal activists echoed through the hallways of Senate office buildings Wednesday, as hundreds staged sit-ins to protest the Republican health care plan that's already on shaky ground.

Clashing with the shouting was the sound of two-way radios from a larger-than-normal police presence to arrest those refusing to heed warnings to stop.

Read the full article here.

WASHINGTON — The Federal Reserve raised its benchmark interest rate Wednesday for just the second time since the financial crisis of 2008, saying the American economy is expanding at a healthy pace and setting itself up as a counterweight to President-elect Donald J. Trump’s push for considerably faster growth.

The Fed cited the steady growth of employment and other economic measures, and signaled that it expects to raise rates more quickly next year to prevent the economy from growing too quickly.

“My colleagues and I are recognizing the considerable progress the economy has made,” Janet L. Yellen, the Fed’s chairwoman, said at a news conference after the announcement. “We expect the economy will continue to perform well.”

The widely expected decision moves the Fed’s benchmark rate to a range of 0.5 percent to 0.75 percent, still very low by historical standards. Low rates support economic growth by encouraging borrowing and risk-taking.

The American economy has expanded by about 2 percent a year over the last six years, and the unemployment rate has fallen to 4.6 percent. The Fed’s assessment that the economy is growing at a healthy pace — not too hot, not too cold — is starkly at odds with Mr. Trump, who has promised 4 percent growth and has described job creation as “terrible” and economic growth as anemic.

Already on Wednesday, one Republican member of the House Financial Services Committee, Representative Roger Williams of Texas, criticized the Fed’s move.

“Today’s decision by the Fed to raise the interest rate is entirely premature and will be burdensome to a nation already struggling to pull itself out of this slow-growth Obama economy,” Mr. Williams said in a statement. “By making rates even higher, the Fed is effectively making our hardships even harder.”

Mr. Williams did not object when the Fed raised rates last December.

In announcing the decision after a two-day meeting of the Fed’s policy-making committee, the central bank gave little indication that Mr. Trump’s election had altered its economic outlook. The Fed said it still expected a slow economic expansion and a steady march toward higher rates. In separate forecasts also published Wednesday, Fed officials predicted three rate increases in 2017.

Rising Rate

The Federal Reserve raised its target rate for only the second time in more than a decade.

Note: Graphic shows the Federal Funds Target Rate previous to the December 2008 rate change; since then it is the upper limit of the Federal Funds Target Range.

By The New York Times | Source: Federal Reserve

For the first time in recent years, however, there is a real possibility of significant changes in fiscal policy. Republicans will control the White House and both chambers of Congress, and Mr. Trump has promised to increase economic growth and job creation through tax cuts and infrastructure spending.

Those measures could spur faster growth after a presidential campaign in which Mr. Trump regularly disparaged the economy’s performance under President Obama. But the Fed reiterated Wednesday that the economy is already expanding at roughly the maximum sustainable pace.

Fed officials also see evidence that the labor market is tightening. Several Fed districts reported labor shortages in the central bank’s most recent compilation of economic reports. In the Philadelphia district, construction workers are hard to find. Atlanta reported a shortage of nurses; Kansas City, truck drivers; Dallas, tech workers.

Faster growth, in the Fed’s judgment, would probably lead to higher inflation. As a result, if Republicans succeed in invigorating growth, the Fed is likely to raise rates more quickly. The greater the stimulus, the faster interest rates are likely to rise.

“Your expectation should depend very little on what you think that the F.O.M.C. is thinking and very much on your view of Trump policies and their macro effects,” said Jon Faust, a professor of economics at Johns Hopkins University and a former adviser to Ms. Yellen, referring to the Federal Open Market Committee. “Don’t focus on the Fed. As James Carville regularly reminded the other Clinton on the campaign trail: It’s the economy, stupid.”

Ms. Yellen emphasized that the Fed was not prejudging the likely course of events. She declined several times to comment on the merits of Mr. Trump’s plans or to predict their consequences for the economy.

“We’re operating under a cloud of uncertainty at the moment,” Ms. Yellen said.

Fed officials predicted that they would raise the Fed’s benchmark rate a little more quickly in the coming years, reaching 2.1 percent by the end of 2018. In September, they had predicted that it would reach 1.9 percent by the end of 2018. The new projections, however, reflect a significantly slower pace of increase than last December, when they expected the rate to reach 3.3 percent by 2018.

The combination of steady growth and faster rate increases indicates that some Fed officials expect the central bank to end up offsetting a modest increase in fiscal stimulus. But Ms. Yellen said most Fed officials were reserving judgment.

“Changes in fiscal policy or other economic policies could affect the economic outlook,” she said. “Of course, it is far too early to know how those changes will unfold.”

What Happens When the Fed Raises Rates, in One Rube Goldberg Machine

Exactly seven years ago, the Federal Reserve cut interest rates to almost zero in order to nurse the ailing economy back to health. Recently it changed direction. This is how it works.

The tensions between monetary and fiscal policy will develop slowly. Legislation takes time to write, and any economic impact would generally be felt in coming years. Political pressures, however, may build more quickly.

Mr. Trump has made clear in the past that he likes low interest rates — and some of his plans, like infrastructure investment, will be much easier to fund if rates remain low.

“The Fed is in a tricky place,” said Michael Feroli, chief United States economist at JPMorgan Chase. “They’re trying not to prejudge how Congress and the administration duke it out, but once they see that, I think they will respond.”

There is also uncertainty about the Fed’s leadership. Ms. Yellen’s term as chairwoman ends in February 2018, and Mr. Trump has said he would prefer a Republican.

Ms. Yellen could remain on the board, a possibility she said Wednesday she had not ruled out. But the Fed, under different leadership, might well choose a different path forward. Some conservative economists, notably John Taylor of Stanford University, argue that the bank should already have raised rates above 1 percent.

The economy, for now, keeps plodding along. Steady job growth has reduced the unemployment rate to a level the Fed considers healthy. A little unemployment is natural as people change jobs and businesses close. Ms. Yellen and other Fed officials have said they see some signs of stronger wage growth. Inflation, too, has picked up a little in recent months, although both wages and inflation continue to rise more slowly than the Fed would like to see.

Ms. Yellen described the rate increase as “a vote of confidence in the economy.”

The decision was made by a unanimous vote of the 10 members of the Federal Open Market Committee, the first time in recent months the Fed has acted by consensus.

Some economists argue that the Fed should wait until inflation strengthens before raising rates, to test whether a stronger economy would persuade some people sidelined during the downturn to start looking for jobs. That would expand the labor force. Unemployment remains particularly high among minorities.

That view, however, has found little support among Fed officials, who worry that interest rates will have to be raised more quickly if they wait too long, increasing the chances of pushing the economy into recession.

“Apparently, Fed officials think the economy is growing too quickly,” said Ady Barkan, the director of Fed Up, a coalition of liberal groups that has pressed the Fed to continue its stimulus campaign. “I doubt you can find many other Americans who share that opinion. And it’s a strange conclusion to draw in the wake of an election that was so heavily impacted by voters’ economic discontent.”

By BINYAMIN APPELBAUM

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