Econ

n/u: Congressional Gridlock

Congressional gridlock takes out business confidence

Andrew Soergel, 5-30-2017, (Washington and Lee University Bachelor of Arts

(B.A.), Journalism and Mass Communications, Business Journalism "Consumer
Confidence Cooling as Trump Agenda Stalls," US News & World Report,
https://www.usnews.com/news/articles/2017-05-30/consumer-confidence-cooling-as-
trump-agenda-stalls//)MBA HBJ
Americans' confidence in the economy appears to
After surging in the aftermath of President Donald Trump's November election,

have edged down in recent months as the White House's legislative agenda
continues to slog through Capitol Hill. B C C i edged down in The Conference oard's onsumer onfidence ndex

May after a similar drop in April, marking the first window of back-to-back
declines seen post-election. The report, published Tuesday, showed the percentage of those who think business conditions are "good" slipped from 30.8 percent to 29.4 percent, while
the percentage of those who said things were "bad" held steady at 13.7 percent. It also showed only 29.9 percent of consumers said jobs were "plentiful," despite the national unemployment rate sitting at its lowest level in the post-recession era.
But the percentage of those who think jobs are "hard to get" ticked down as well, from 19.4 percent to 18.2 percent. RELATED CONTENT For 21 percent of young workers in 2014, owning a home is their biggest financial aim. Prices, Unrealistic
Expectations Barring Millennials From Homeownership The overall index still sits comfortably above where it did in October and November, when a tense election cycle and an uncertain economic future combined to depress consumer

Yet recent stock market volatility has thrown the Trump rally into
sentiment.

question, and other sentiment trackers also indicate Americans aren't

nearly as bullish about their economic prospects under Trump as they were
before he got started . The University of Michigan's Surveys of Consumers sentiment tracker has held steady in recent months, but is down from its January and February highs. And a separate weekly
confidence tracker compiled by Gallup most recently showed Americans were only "marginally positive about the economy" for the week ending May 21. The index was only slightly improved from the post-election low hit during the previous

week. "At a time when the news regularly suggests that politically, the country is in uncharted waters, it wouldn't
necessarily be surprising if the turmoil exacted a toll on
Americans' confidence in the economy ," the Gallup report said. RELATED CONTENT Couple carrying shopping bags in shopping mall.

Revisions Boost GDP to 1.2 Percent Gain in Q1 Trump has taken to Twitter to defend his legislative agenda upon his return from his first international expedition as commander-in-chief. He tweeted that his "massive tax cuts/reform" are "moving

Mnuchin appears to have abandoned his

along in the process very well, actually ahead of schedule," despite the fact that Treasury Secretary Steven

previous by-August deadline for realizing some sort of comprehensive tax

legislation. On Tuesday, Trump also suggested the Senate employ the nuclear option and "switch to 51 votes" meaning a simple majority in the Senate to "get health care and tax cuts approved, fast and easy."
Republicans do not appear unified in their efforts to get health care or tax reform through, and the nuclear option would allow them to move bills in the upper chamber without worrying about a Democratic filibuster. Meanwhile, falling consumer
confidence and uncertainty about whether Trump will be able to realize his pre-election goals don't appear to have hurt consumers' spending habits in recent months. A separate report published Tuesday by the Bureau of Economic Analysis

Real consumption declined in the first

showed inflation-adjusted personal consumption ticked up 0.2 percent in April after gaining 0.5 percent in March.

two months of the year, despite consumer confidence metrics climbing to

record levels. Generally, confidence and spending move hand in hand. But 2017 has offered a more divergent pool of data, with the two metrics steadily moving in opposite directions. RELATED CONTENT <p> A
cargo container is moved at the Port of Tacoma, Friday, Feb. 20, 2015, in Tacoma, Wash. With a Friday deadline looming, negotiators for the two sides in the contract dispute that has snarled international trade at U.S. West Coast seaports are

Consumer
laboring to reach a settlement as billions of dollars of cargo are sitting massive ocean-going ships anchored outside port facilities. (AP Photo/Ted S. Warren) </p> Trade Gap Rises in Trump's First Months

performance is hardly insignificant, as Americans' personal consumption accounts for the lion's share of national gross domestic product reports each quarter.

The soft showing in January, February and March, for instance, contributed
to a lackluster growth rate of only 1.2 percent. Confidence is considered more of a leading indicator than spending, so it's possible the consumption gains seen in March and April are just a
response to the positive sentiment enjoyed during the first two months of the year. But steadily rising personal income also appears to have been a factor, as inflation-adjusted after-tax income climbed 0.2 percent in April and has expanded in
four consecutive months. "The April personal income and spending report signaled that wage gains are increasing and consumers are willing to open their wallets after being somewhat cautious in the first quarter," Chris Christopher, an
economics director at IHS Markit, wrote in a research note Tuesday. "The first-quarter showing on the consumer spending front was an aberration, influenced by unseasonably warmer weather, a spike in consumer price inflation, delayed income

Should confidence keep falling, though,

tax refunds and payback for a strong fourth quarter on the holiday and auto sales fronts."

consumers may create for themselves a self-fulfilling prophecy that would

jeopardize the Trump team's ambitious goal of 3 percent economic growth.
Uncomfortable consumers who pull back on spending in the face of
Washington gridlock ultimately will drag on the economy and make it even
harder for the White House to hit such a target. Americans' confidence in "

the economy remains notably lower than where it stood in earlier parts of
the year," Their outlook for the economy has become less positive in
Gallup's report said. "

recent weeks, perhaps because they like many on Wall Street may have
increasing doubts about whether the Trump administration can deliver on
its promises of economic growth, decreased regulation and tax reform."

Its true for consumers as well

Akin Oyedele, 2-24-2017, (Citing University of Michigan bimonthly consumer

confidence study, "Consumer confidence falls for the first time since Trump's election,"
markets.businessinsider, http://markets.businessinsider.com/news/stocks/university-
of-michigan-consumer-confidence-sentiment-february-2017-2017-2-1001781691-
1001781691//)MBA HBJ
Consumer confidence in the US economy fell for the first time since the
election , according to the University of Michigan's bimonthly survey. The sentiment index in February fell to 96.3 from a January reading of 98.5, which was the highest in a decade. Economists had forecast a reading of 96. The
rise in confidence, which remains above pre-election levels, has been one of the biggest economic stories since President Donald Trump won the election. Other surveys of consumer and business confidence have shown that Trump's promises of

feelings on the economy largely

tax reform and deregulation resonated strongly with many Americans. However, what UMich's survey also exposed was that

mirrored political views. The post-election gain "represents the result of an

unprecedented partisan divergence, with Democrats expecting recession
and Republicans expecting robust growth "Since neither ," said Richard Curtin, the survey's chief economist, in a release.

recession nor robust growth is expected in 2017, both extremes must

eventually converge." He added that self-identified independents leaned closer towards Republicans' outlook for strong economic growth. Curtin recently cautioned that

confidence could ease in the month's ahead, since consumers may be

experiencing the honeymoon phase of Trump's presidency. They would need
to see concrete results out of Washington and improvement in their
personal finances to remain this optimistic about the future.

Stock market proves markets are losing confidence and their ev is hype

Lucy Bayly, 5-17-2017, "Dow slammed by loss of confidence in Trump; closes down
372 points," NBC News, http://www.nbcnews.com/business/markets/wall-street-
having-its-worst-day-2016-n760841//)MBA HBJ
D J I
The ow dropped
ones bringing the giddy post-election rally of the
ndustrial Average by 372.82 points on Wednesday,

past few months to a halt as investors began to worry about the daily
revelations of disarray with Trump's administration. President Donald It's the first time since Trump's election that the market

a clear indication of waning confidence in the president's

has snubbed the commander in chief, and

ability to fulfill his key promises of tax reform, deregulation, and investment
in infrastructure. Donald Trump Is Having a Very Bad Month Play Facebook Twitter Embed Donald Trump Is Having a Very Bad Month 1:55 The Dow closed at 20,606, with financials such as Goldman
Sachs and Morgan Stanley absorbing the most losses. "This is clearly Washington-driven," Michael Shaoul, chairman and CEO of Marketfield Asset Management, told CNBC. "It's a lot like 1998-99, when the market had to deal with the [Monica]

Lewinsky scandal." Seemingly unflappable until now, investors are clearly spooked that
the heightened drama in Washington including Comey the revelation that Trump asked FBI Director James to halt an

Flynn will swallow up the passage of Trump's promised

investigation into former National Security Adviser Michael

regulatory reforms and tax cuts. The promise of corporate tax reform in
particular was a key factor that propelled the stock market to record highs since

Stocks weren't the only metric impacted by the

Trump's victory in November. Related: Comey Memo Has White House in a Tailspin

drama engulfing the White House. The dollar dropped back to pre-election
levels; and the "fear" index soared by almost 40 the CBOE Volatility Index, which measures the fragility of markets

percent Predictions that President Trump would be

on Wednesday, marking the largest gain in eight months.
impeached hit a high of 27 percent on Wednesday, according to the online betting site PredictIt. "An impeachment proceeding
would blow the market away," Jack Welch, former CEO of General Electric, told CNBC.

Investment trends prove confidence is low

Lee Conrad, 6-02-2017, (Bank Investment Consultant "Millionaire confidence

plummets as President Trump underwhelms ," Spectrem group,
http://spectrem.com/Content/financialplanning-millionaire-confidence-pummets-
061317.aspx//)MBA HBJ
investor confidence among the jet set took a nosedive last month.
As the markets soar into blue skies,

This fall was all the more dramatic since the outlook of the well-heeled was sitting on a
four-year high as recently as April, Then it took the according to the Millionaire Confidence Index from research and consulting firm Spectrem Group.

biggest one-month fall in the 13 years that Spectrem has published the survey. In fact, its the first time in the past six years that millionaires confidence fell below that of the
affluent segment, defined as households with at least $500,000 in investable assets. The affluents confidence fell in May too, but not as far or from the same heights that millionaires had enjoyed in April. This index ranges from -50 (the most
bearish) to 50 (the most bullish). Millionaires fell to a level of 3 in May from 20 in April. Affluent investors declined to 6 from 10. For perspective, at a level of 20, millionaires were mildly bullish, as Spectrem defines its index, in April. At a level

Although non-millionaires also recorded a drop in confidence, the

of 3, they were squarely in neutral category in May.

fact they are slightly more confident now than millionaires is a strong indication that we
may be entering a tumultuous period for investors, Spectrem President George Walper Jr. said in a press release. The irony in this loss in confidence is
that it happened against a backdrop of a bull run in the U.S. market. Indeed, the S&P 500, as measured by both Vanguards and State Streets ETFs, returned 1.4% in May alone, capping a six-month run of 10.7% annualized. So what caused the

turbulence in Washington and significant doubt about the tax reform

record-breaking drop? Spectrem pointed to

promised by Trump concerns over

President federal budget, as well as the recently submitted proposed . Indeed, more than half of investors surveyed (54%) cited

Conventional wisdom would suggest the

the political environment as the story in the news most affecting their economic outlook, dramatically greater than any other topic.

attitudes and sentiments of the general population will follow the millionaires, said Tom Wynn, director at
Spectrem. But he also noted that normal conventional wisdom isnt so normal anymore. Instead of one investor segment following another, he said that a better sense of direction from Washington is whats most needed. "I believe we will

continue to see some ups and downs in both the millionaire index and the affluent index until we get a better direction of what the current administration is going to do. Indeed, investors will continue
to be cautious until we get some clear direction in what President Trump will do and a barometer of how the business community will react to his plans.
 L/t: Spending K2 Econ
Government spending is good and necessary to fix our current economy

Elliott, Guardian Economics editor, 12/11/16

[Larry, Keynesian economics: is it time for the theory to rise from the dead?, The
Guardian, https://www.theguardian.com/business/2016/dec/11/keynesian-economics-
is-it-time-for-the-theory-to-rise-from-the-dead]
Keynes is told that ever bigger doses of monetary soma have been necessary to keep the
global economy ticking over, with weak investment leading to poor productivity and
growth rates well below those seen in the years leading up to the crisis. He asks the obvious
question if monetary policy has ceased to be effective, what have governments been doing
to help? It is an obvious point to raise. His General Theory says that the desire of the private sector
to invest is affected by animal spirits. When animal spirits are low, governments should
step in with public investment. They should do this even at the cost of a higher budget
deficit, because the higher growth that will result will mean the investment more than
pays for itself. He is aghast to hear that apart from during a brief period of collective
stimulus in 2009, this approach has not been followed. Governments quickly grew concerned about the size of their
budget deficits and cut public investment. But weak growth meant deficit reduction took longer
than expected. Ultra-low interest rates for the best part of a decade have led to asset-
price bubbles. Measures of private indebtedness are rising again. All depressingly predictable, Keynes says.
Time to return to 1936. Before you go, he is asked, what advice do you have for policymakers in 2016. Keynes outlines three
alternatives to the status quo. The tax-cutting and infrastructure spending plan proposed by
Trump will lead to stronger growth in the short term, but Keynes says he is not especially impressed. He
fears that there will be little extra investment in the public infrastructure that the US
actually needs and that the stimulus will be poorly focused. The second option would be
to exploit exceptionally low interest rates by borrowing for long-term investment
projects. Governments could do this without alarming the markets, Keynes says, if they followed his teachings and borrowed solely to
invest. Option number three would involve being more creative with quantitative easing, Keynes says. Instead of the newly created money
being used for speculative plays, why shouldnt governments use it to finance infrastructure? Building homes with QE makes sense;
inflating house prices with QE does not. There
is, he adds, another escape route. We were building up to
it in 1936 and it arrived three years later. Not recommended.

Spending is good- economic austerity shrinks the economy

Blyth, Brown University Watson Institute of International and

Public Affairs Political Economy professor, 10/29/16
[Mark, How the politics of debt explains everything, The Week,
http://theweek.com/articles/657252/how-politics-debt-explains-everything]
By 2010, everyone had heard the "austerity" rallying cry. Immediately following the 2008 financial crisis,
especially in Europe, it resounded: "Stimulate no more, now is the time for all to tighten!" And tighten governments did,
cutting public expenditure across continental Europe, and in the United Kingdom and the United States. The logic behind
"austerity" holds that "the market" which the public had just bailed out did not like the debt incurred when states
everywhere rescued and recapitalised their banking systems. Unsurprisingly, tax revenues fell as the economy
slowed and state expenditures rose. And what were once private debts on the balance
sheets of banks became public debt on the balance sheet of states. Given this sorry state of affairs,
states (policymakers and business leaders argued) had to take action to restore "business confidence"
which is apparently always and everywhere created by cutting government spending. So
governments cut. Public debt, however, grew, because economies got smaller and grew
slower the more they cut. The "confidence fairy," as Paul Krugman named the expected effect, simply failed to show up. Why?
The reason is simple and it is surprising anyone thought that anything else would happen. Imagine an economy as a
sum, with a numerator and a denominator. Make total debt 100 and stick that on the top (the numerator). Make
Gross Domestic Product (GDP) 100 and stick that on the bottom (the denominator) to
give us a 100 percent debt-to-GDP ratio. If you cut total spending by 20 percent to
restore "confidence," the economy is "balanced" at 100/80. That means the debt-to-GDP
ratio of the country just went up to 120 percent, all without the government issuing a
single cent of new debt. In short, cuts to spending in a recession make the underlying
economy contract. After all, government workers have lost jobs or income, and government
workers not shopping has the same effect as private sector workers not shopping. So the
debt goes up as the economy shrinks further. States respond by cutting spending further. The pattern continues.
CP
 States fail
Perm do bothstates alone fail due to murky relationships, scarce
resources, etc. With federal oversight and cooperation, those things are
resolved. The perm is the only viable option

Perm do the counterplan

States fail even with fiat---they lack relationships and trust with district
leaders
Weiss and McGuinn 16 - *consultant to organizations on education programs,
technologies, and policy, and former chief of staff to U.S. Secretary of Education Arne
Duncan, **PhD, Professor of Political Science and Education at Drew University and
Senior Research Specialist, Consortium for Policy Research in Education (Joanne and
Patrick, The Evolving Role of the State Education Agency in the Era of ESSA: Past,
Present, and Uncertain Future,
http://www.aspendrl.org/portal/browse/DocumentDetail?documentId=2958&downloa
d&admin=2958%7C1917288972)//BB
As the state role in education continues to grow and evolve, it is important to recognize
that all SEAs are not the same each states education agency has a
unique history and operates in a different fiscal, political,
statutory, and constitutional context. In particular, states vary significantly in
their attachment to local control of schools and the proper role of the state in education
and this has a major impact on how SEAs Page 14 approach their work. States vary
widely in the amount of centralization/standardization they have
mandated in their policies either in statute or in regulationand this has a
major impact on the SEAs approach to supporting school districts .
A clear tension exists between districts desire for flexibility to adopt policies that local
officials see as best suited to their particular circumstances, some states' desire for more
uniform policy, and SEAs limited capacity to provide oversight and implementation
support for widely divergent district approaches.26 As a recent Fordham Institute
analysis noted, many states are simply philosophically opposed to an
active SEA role and resistant to the idea of standardizing policies across districts.
27 There are also constitutional limitations on the role of the SEA in some states such as
Colorado. Tennessee State Board of Education Director Sara Heyburn has added that
the state role varies drastically from state to state in terms of how much local control
exists. It has huge implications for what the state attempts to do or doesnt do and the
kinds of support you offer at the state level versus how you facilitate the right things to
be happening at the district level. Furthermore, even where an SEA may have
the resources and constitutional and statutory authority to be
active in education policy , it may lack the relationships and trust with district
leaders that are essential to ensure effective collaboration.

States dont have the resources to effectively enforce the CP

Weiss and McGuinn 16 - *consultant to organizations on education programs,
technologies, and policy, and former chief of staff to U.S. Secretary of Education Arne
Duncan, **PhD, Professor of Political Science and Education at Drew University and
Senior Research Specialist, Consortium for Policy Research in Education (Joanne and
Patrick, The Evolving Role of the State Education Agency in the Era of ESSA: Past,
Present, and Uncertain Future,
http://www.aspendrl.org/portal/browse/DocumentDetail?documentId=2958&downloa
d&admin=2958%7C1917288972)//BB
Despite the clear need for SEAs and districts to provide sustained support to schools,
significant capacity issues persist. 33 Daniel Weisberg of TNTP believes that capacity
is a huge challenge at the state level. State departments of
education often just dont have the resources to really do a full
state-wide rollout of a major initiative and ensure quality
implementation in every district. Race to the Top required them to go beyond
policy to actually be the implementers and thats a very different role." Weisberg is
hardly alone in his concern about SEAs lack of capacity to fulfill their expanding
responsibilities. Given the current tight fiscal climate, most states have been unable or
unwilling to allocate new money to support the implementation of new reforms initiated
in the wake of NCLB and Race to the Top. In a 2011 survey of SEAs, Cynthia Brown and
her colleagues noted that a wave of recent reforms had put immense stress on agencies
that were originally conceived as tiny departments primarily designed to funnel money
to local school districts. Yet it is not at all clear that state education agencies are prepared
for this demanding new role.34 Former Louisiana Superintendent Paul Pastorek has
expressed concern that the USED and many states have been insufficiently attuned to
these capacity deficits, saying, I think some [states] may be underestimating the
resources and energy that these kinds of initiatives require . . . state departments
of education are not designed to implement these programs. 35
 States fail internal politics
Internal politics within the states will corrupt the CP, national standards
are necessary to keep them in check
Louis 2015 - Regents Professor; Robert Holmes Beck Chair of Ideas in Education @
U of Minnesota
Karen Seashore, Karen Febey, and Molly F Gordon, Political Cultures in Education:
Emerging Perspectives in Handbook of Education Politics and Policy, Routledge, p.
122-123
In the United States, individual states bear the responsibility for developing most significant social policies, even when
they do so within federal guidelines (Reeves, 1990). Even the No Child Left Behind (NCLB) Act acknowledges the central
role of the states in setting standards and designing their own accountability systems (Sunderman, 2003), and the more
recent federal initiatives such as Race to the Top also presume that the states will change policies in areas such as teacher
and principal evaluation and school choice. NCLB
foreshadowed a more formal, national regulatory
system, but because school funding is local and state based, federal influence is likely to
remain contested for the foreseeable future. In other words, the state is, historically, the locus
in which educational policy is played out (Timar & Kirp, 1988), and state political acti vism is
increasing, along with vocal resistance among both politicians/policy advocates (Scott, 2012)
and scholars (Ravitch, 2012) to the national standards and accountability move ment. It is
beyond the scope of this chapter to consider how current debates over national state control will emerge, but there is
reason to believe that states may be, at minimum, ambivalent about giving up their constitutional right to separateness in
education (Gass & Stergios, 2013; Strauss, 2013).3 States exercise both direct and indirect influences
on school districts and schools. Direct influence comes through legitimate rules that are
based on accumulated legislative and court actions (Roch & Howard, 2008); indirect influence
emerges as part of cultural constraints and shared assumptions that have also
accumulated over long periods of time (Marshall, Mitchell, & Wirt, 1986; Timar & Kirp, 1988 ). However,
although both the cultural and legal/legislative systems are designed for stability, stakeholders show little
agreement on the proper state role in education when confronting a high demand for
reform. States are, for example, expected to lead standard setting for student achievement
and curricular content and monitor school quality, while also simplifying regulations for
running schools and promoting site-based management and citizen participation (Elmore &
Fuhrman, 1995; Louis, 1998; Swanson & Stevenson, 2002), but recent reviews of school reform efforts suggest that
states' capacity to carry out the expected role is variable, as is states' ability to finance
significant reform efforts (Gottfried et al., 2011; Mehan, 2013). As states attempt to enact policies and
mechanisms to affect education, political culture will play a role in determining how they balance
conflicting expectations and policies, and whether the development of capacity to
exercise leadership in school reform is a priority. State-specific studies have continued to
show that political culture and accumulated history help to predict both the dynamics
and outcomes of legislation (Mazzoni, 1993; Sacken & Medina, 1990). In addition to political culture, state
educational policy making and activism are affected by legislative politics, structural
limitations, economic constraints, and legal context (Roch & Howard, 2008; Wong, 1989). States have,
therefore, struggled to find the appropriate policy mechanisms to influence teaching and learning-the core of educational
policy, but also the most difficult and resistant to change from outside the school. Because
of political and
economic pressures, policy makers often use a narrow range of policy mechanisms
(mandates and incentives) because they are most likely to produce positive, short-term
results (Rossman & Wilson, 1996), although they also narrow and constrain professional flexibility at the school level
(Olsen & Sexton, 2009). Lon ger-term strategies such as capacity building and systems change are less common, partly
because they are slow to demonstrate significant impacts (Datnow et al., 2003; Elmore & Fuhrman,1995; Gross, Booker, &
Goldhaber, 2009). Regardless of the type of policy mechanisms that states use to develop and implement educational
policy, the primary values driving policies are efficiency (detailed procedures for school authorities to abide by); equity-
redistribution of resources for those lacking them;quality-standards of excellence (Garms, Guthrie, & Pierce, 1978); and
choice the range of options available (Marshall et al., 1986). There are distinct differences in the ways that those values are
manifested in state educational policy makers' actions and school laws (Marshall, Mitchell, & Wirt, 1989). A recent study
of U.S. states (Louis et al., 2008) expanded on the values driving policies by combining frameworks of political culture
dimensions, level and type of stakeholder involvement, and policy levers to analyze differences in states' educational
policies for leadership and accountability. The seven states in this study (Indiana, Mississippi, Missouri, Nebraska, New
Mexico, Oregon, and Texas) differed and were similar in complex ways: Political culture clearly was a factor in all, and
accounted for differences as well as similarities. In the ne xt two sections of this chapter, we explore the impact of political
culture on the development of state educational policy and provide illustrations of schools' responses to policy in two
states.