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Two Economists Explain the Federal Reserve’s Fourth Consecutive Interest Rate Hike

The Federal Reserve has increased interest rates by .75 percent. Economists Ryan Sweet and Dean Baker explain what that means.

Federal Reserve Chair Jerome Powell
Drew Angerer/Getty Images

The Federal Reserve on Wednesday announced an interest rate hike of 75 basis points for the fourth consecutive time.

With inflation at a 40-year high, the Fed has been scrambling to get interest rates high enough that people stop spending money, slowing the economy down in turn. If spending goes down, then so will demand and eventually prices, too.

But the risk is that growth will slow while prices and borrowing rates stay high, sending the economy into a recession.

Ryan Sweet, chief economist at Oxford Economics, and Dean Baker, senior economist at the Center for Economic Policy and Research, answered four questions about what this means going forward.

What will the decision mean for Americans?

Both economists said that the higher interest rates will mean higher mortgage rates and higher rates on personal loans, car loans, and credit card debt.

But “it’s not all bad news as savers will receive a higher interest rate,” said Sweet.

Why is inflation still so high, even with all the rate increase?

“The issue for the Fed is that the Fed funds rate is a blunt tool and can affect the demand side of the economy, but this isn’t responsible for the bulk of the U.S. inflation issues,” Sweet explained. Supply chain snarls caused by the pandemic and Russia’s invasion of Ukraine are the major contributors to the record-high inflation.

Unfortunately, the U.S. central bank’s policies can’t do anything about the supply issues. The policies also take a long time to go into effect.

Fortunately, according to Baker, “there is a lot of evidence inflation is already slowing. The price of many items, like appliances, used cars, and TVs are already falling.”

This many consecutive rate hikes is uncharted territory for the Fed. Should we be concerned?

“Definitely,” said Baker. “The full effect of the rate hikes to date will not be felt until well into 2023. The Fed may well have gone too far.”

The Fed is scrambling to achieve a so-called soft landing, or a decrease in inflation without tipping the U.S. economy into a recession. Fed Chair Jerome Powell said Wednesday that the time to slow rate hikes “is coming,” but he did not give a time frame for when that would happen.

Sweet warned that any easing will be “contingent on inflation moderating, job growth slowing and financial market conditions.”

Given how many variables there are in avoiding a recession, it’s unclear what the Fed will do next or whether they will be successful. And unfortunately, “risks of a recession are uncomfortably high,” Sweet said.

Is a soft landing still possible?

All hope is not lost.

Sweet said that, based on his firm’s analysis, the central bank likely can’t contain economic growth sufficiently, but “the Fed still has a shot”—so long as job growth slows, indicating the economy is slowing, as well.

Baker warned that a lot will depend on whether there are “further major economic disruptions,” such as another Covid-19 wave or an expansion of the war in Ukraine.

“A soft landing is very much possible, but we really are in uncharted waters,” he said.

This article has been updated.

Tulsi Gabbard Has Endorsed At Least 12 Republicans This Election Season

The so-called “free thinker” has only endorsed Republicans since leaving the Democratic Party.

Slaven Vlasic/Getty Images

On October 11, Tulsi Gabbard proudly announced her departure from the Democratic Party. Calling on “fellow common sense independent-minded Democrats” to join her, Gabbard did not indicate where exactly she was going. Her recent activity gives enough of an idea.

The former Hawaii congresswoman and 2020 Democratic presidential contender has exclusively endorsed at least 12 Republican candidates across the country. Many of these races are high-stakes. Among Gabbard’s endorsements are several election-denialists and conspiracy theorists.

Less than a week after her announcement that she was leaving the Democratic Party, Gabbard endorsed Republican Don Bolduc in the New Hampshire Senate race. Threatening to unseat incumbent Senator Maggie Hassan, Bolduc is an election denialist who has repeatedly—and bizarrely—falsely claimed children are using litter boxes in schools. A day after that, Gabbard endorsed Republican Kari Lake, the conspiracy theorist and election denialist running for governor in Arizona.

Gabbard has also endorsed JD Vance against Tim Ryan in Ohio’s Senate race, Adam Laxalt against Catherine Cortez-Masto in Nevada’s Senate race, and Tudor Dixon against Gretchen Whitmer in Michigan’s gubernatorial election.

On Monday, Gabbard waded into the country’s most expensive House race, endorsing election denialist Tom Barrett in Michigan, rebuking Liz Cheney’s earlier endorsement of Democrat Elissa Slotkin.

On Wednesday, Gabbard tweeted a video endorsing Blake Masters, citing a need to “rein in big tech companies.” (Masters and Vance have both enjoyed financial support from the venture capital and technology industry they were a part of, including from tech billionaire Peter Thiel.) Also on Wednesday, Gabbard appeared at a rally for South Dakota Governor Kristi Noem, who days earlier she had called her “close friend.”

Gabbard has also endorsed Illinois gubernatorial candidate Darren Bailey, Utah Senate incumbent Mike Lee, candidate for Washington’s third congressional district Joe Kent, and candidate for Michigan’s third congressional district John Gibbs (an election denialist who in the past suggested that women should not have the right to vote).

Gabbard’s shift is not surprising. Beyond appearing at CPAC this year, she has found a home in right-wing media. There, she has focused less on bringing conservatives closer to her, and more on bringing herself closer to them—criticizing the impeachment inquiry into former President Donald Trump as “partisan,” complaining about “open borders,” and even filling in for Tucker Carlson on his show.

If Gabbard is just preparing for 2024, she can take comfort knowing support is already bubbling. David DePape, the man who attacked Paul Pelosi last week, has endorsed Gabbard to be Trump’s running mate.

This piece has been updated.

Arizona Judge Restricts Armed Vigilantes Monitoring Election Drop Boxes

The order prevents members of Clean Elections USA from standing within 75 feet of a ballot box or following voters after they drop off their ballots.

OLIVIER TOURON/AFP via Getty Images
A poll worker in Maricopa County, Arizona.

In a rare piece of good news, an Arizona judge has banned people accused of voter intimidation from monitoring the state’s ballot boxes ahead of the contentious midterm elections.

U.S. District Court Judge Michael Liburdi sharply restricted the activities of a group called Clean Elections USA late Tuesday. The group says it is watching ballot dropoff locations for potential voter fraud, but it has been accused of voter intimidation

Group members cannot stand within 75 feet of a ballot box, Liburdi said in his ruling. They cannot speak to people at the boxes unless spoken to first and cannot follow voters after they drop off their ballots.

Watchers are not allowed to be armed—some of them have been—and they cannot take photos or videos of voters. Both the group and its founder Melody Jennings have to post statements on the Clean Elections USA website and Truth Social, former President Donald Trump’s social media platform, explaining they have been spreading disinformation about Arizona elections.

Arizona law enforcement has been on high alert over the past few weeks after reports of sometimes armed people showing up to watch ballot boxes. Many voters have accused the watchers of voter intimidation after they took photos and videos of people dropping off their ballots and followed voters.

The watchers could have scared off other potential early voters, or voters in general. They have received support from Mark Finchem, who is running for Arizona secretary of state.

They have apparently been inspired by widespread lies about the 2020 election result. Trump has claimed for years, with zero proof, that the vote was rigged against him.

The League of Women Voters sued Clean Elections USA last week, accusing them of voter intimidation and seeking a court order to halt their actions. During the trial on Tuesday, a man and his wife testified that they had been harassed and filmed by eight to 10 people accusing them of being “mules” for fraudulent votes.

Photos of the man and his car were published, and Jennings later spoke about them on the podcast of former Trump advisor Stephen Bannon.

Liburdi’s ruling Tuesday is both a relief and an about-face from Friday, when he refused another group’s request to ban Clean Elections USA from ballot boxes. “Plaintiffs have failed to show” their case is likely to succeed, the Trump-appointed judge said.

Arizona has struggled particularly hard with false claims that the 2020 election was stolen. Governor Doug Ducey certified the state’s result in favor of President Joe Biden, but the state’s Republican Party supported a massive recount of the votes that ultimately found no evidence of voter fraud.

Republicans are also already priming voters to reject Democratic victories in the upcoming midterm elections, particularly tight ones, as fraudulent.

Report: “Death to Arabs” Was the Chant at the HQ of the “Star” of the Israeli Elections

The Israeli elections aren't just about Netanyahu. It gets worse.

Mostafa Alkharouf/Anadolu Agency via Getty Images
Kahanist lawmaker Itamar Ben-Gvir

The main news takeaway from the Israeli elections Tuesday is that Bibi Netanyahu is apparently lined up to be prime minister again, thus avoiding prison (which some speculated was the main, Trump-like reason he ran in the first place) and sweeping back to power. His Likud Party will lead a right-wing bloc that may hold up to 65 seats in the 120-seat Knesset—a pretty substantial margin in a deeply divided country. 

But scratch below the surface, and the real big news is even worse than a resurgent Bibi. The hard right coalition of small parties scored a huge win and will roughly double its representation in the parliament. Haaretz, the liberal newspaper, didn’t mince words. The headline on the column by Aluf Benn, the paper’s respected editor, read: “The Latest Incarnation of the Right: Kahanist Bibi-ism.”

If you don’t know anything about Israeli politics, consider this. Translating that headline into American terms, it might read something like: “The Latest Incarnation of the Right: Duke-ist Trumpism,” Duke being David Duke, the neo-Nazi Klan leader from Louisiana. That’s how bad this is. Kahanism refers, of course, to Meir Kahane, the racist, right-wing leader from the 1980s whose Kach Party was so extreme it was banned from the Knesset.

The new face of Kahanism is Itamar Ben-Gvir of the Otzma Yehudit Party, part of the Religious Zionism coalition. He has spent years spouting extremist and racist rhetoric about Arabs; last week, his party started forming an armed civilian militia in Tel Aviv to monitor Palestinian laborers. Benn referred to him as the “star” of the campaign, waving his “banner of racism and nationalism, which has also infected the Likud campaign.” Haaretz also reported that according to some witnesses, the crowd celebrating Ben-Gvir’s victory “chanted ‘death to Arabs’ alongside the more prevalent calls for ‘death to terrorists.’”

The vote is only about 85 percent complete, so if the small parties of the left and center exceed their existing count in the remaining votes, the worst extremism could yet be blocked. But it appears that Israel has taken a sharp turn toward a right that’s more extremist and hard-line than even Bibi.  

America’s Richest 506 Executives Make More than 30 Million Workers

A new analysis from DCReport finds that the top American executives made an average of $151 million last year.

Workers wear purple tshirts that read "L.A. COUNTY NEEDS OUR CARE" and hold SEIU signs that read "Time for $20." A woman in the foreground raises her sign in the air and is chanting something.
Robert Gauthier/Los Angeles Times via Getty Images
Workers urge the Los Angeles County Board of Supervisors to increase the minimum wage to $20, November 1, 2022.

Death, tax favors, and inequality: the certainties of American capitalism. Just last year, the 506 highest paid individuals in America made more money than the 30 million lowest paid full-time workers, according to a new analysis from DCReport.

David Cay Johnston, economics journalist and author of the report, argues that a growing yet still exclusive class of “executive” workers augment already existing inequality. Johnston points to how only 13 individuals made $50 million or more in 1997, compared to 506 in 2021. The average pay of those 506 individuals? $151 million.

“The savings and investments that the best paid employees can afford only widen the distance between America’s once vibrant but now hollowed out Middle Class and the Executive Class,” Johnston writes.

Meanwhile, the rich seldom pay taxes. Much of their wealth stems from stock and asset gains, whose taxes can be avoided. Loopholes like these, as well as carried interest and pass-through business income, allow the wealthiest to avoid fair taxation. Politicians have signed off on this. Recall Arizona Senator Kyrsten Sinema holding up President Joe Biden’s Inflation Reduction Act until a provision addressing the carried interest tax loophole was removed.

While the slowly-increasing “exclusive” class enjoys comfortable benefits and daily life, it remains expensive to be poor. Childcare, mobility, housing, health care, and even groceries cost much more proportionally for a working person than someone at the top.

It’s no secret how often our elected officials themselves contribute to these inequalities—whether by passing rich-favoring tax laws, inhibiting progressive legislation, or even being among the rich who commit insider trading.

Johnston argues that such inequality has led to millions of Americans being “willing to throw away their liberties” in the false hope that people like Donald Trump may alleviate financial woes.

Beyond his own tax evasion and fraud, Trump’s tax cuts helped billionaires for the first time pay less taxes than the working class.

Read more at DCReport.

A Closer Look at Alexandre de Moraes, Brazil’s Top Election Official

Moraes has kept a close eye on Jair Bolsonaro and helped ensure a peaceful transfer of power. But many analysts worry he's overstepped.

Alexandre De Moraes
Arthur Menescal/Getty Images 2022

Brazilian President Jair Bolsonaro’s peaceful transfer of power to Luiz Inacio Lula da Silva, following his election loss, is thanks in large part to one man: top Supreme Court judge Alexandre de Moraes.

The judge has been praised for his dogged campaign to rein in the outgoing far-right leader. But many analysts worry that Moraes has overstepped the boundaries of his role, and risks denting the high court’s legitimacy in the long run.

Bolsonaro, a firmly anti-establishment figure, and Moraes, a stalwart of Brazilian political institutions, have feuded bitterly over the past few years. Moraes, who was appointed by Bolsonaro’s predecessor, has launched multiple criminal probes into the now former president and arrested some of his main allies.

Moraes is also investigating the source of lies and death and rape threats against the Supreme Court justices and their families, as well as an alleged online network of businessmen, political advisors, and bots spreading pro-Bolsonaro disinformation.

Michael Mohallem, a professor at the Law Institute of the Pontifical Catholic University of Rio de Janeiro, warned that the court’s casting of itself as both victim and judge could come back to bite it. “Once you cross that line, you have extra work to say why that same precedent doesn’t apply again,” he told Bloomberg News in June.

Bolsonaro, for his part, has lashed out repeatedly at Moraes. The former army captain has said he does not recognize Moraes’ power and praised the former military dictatorship.

In the run-up to the election, Bolsonaro repeatedly sought to cast doubt on Brazil’s electronic voting system, saying it was susceptible to fraud. Many worried that he would refuse to accept the results if he lost and try to overturn the election, in the manner of Donald Trump. Bolsonaro is an outspoken admirer of the former U.S. president, and vice versa.

Bolsonaro has yet to formally acknowledge his defeat, but he has not contested the results. His office has said it has begun the transfer of power to Lula.

Moraes, who was appointed the chief election official, was given unilateral power in the last few weeks before the election to moderate what was posted online in Brazil.

He was able to order tech companies to remove any posts that contained false information. Bolsonaro’s supporters decried the move, but so did many internet law and civil rights experts, who said it risked tipping into authoritarianism.

Supreme Court Says Lindsey Graham Must Testify in 2020 Georgia Election Probe

After a slew of legal victories, this is a major setback for Team Trump.

Kevin Dietsch/Getty Images

Lindsey Graham will have to testify about alleged efforts to overturn 2020 election results after all, after the Supreme Court on Tuesday rejected his request to block a subpoena ordering him to appear in front of a grand jury.

A Georgia prosecutor is investigating phone calls Graham made to election officials in the state, which went for President Joe Biden during the election in a major upset. The 11th U.S. Circuit Court of Appeals unanimously denied the South Carolina senator’s claim of constitutional immunity from the investigation.

Graham had argued the Constitution’s speech and debate clause, which grants members of Congress protections while performing their duties, shielded his actions surrounding the election.

The senator filed an emergency request with the Supreme Court, and on October 24, Justice Clarence Thomas did Graham a solid, issuing a temporary stay on the subpoena. (Meanwhile, Thomas’ wife Ginni Thomas is also being investigated for allegedly trying to reject the election results.)

But on Tuesday, the Supreme Court sided with the lower courts and overturned Thomas’ stay, in a win for Fulton County District Attorney Fani Willis, who is investigating Graham’s calls.

The Fulton County investigation began in February 2021, spurred in part by former President Donald Trump’s plea to Georgia Secretary of State Brad Raffensperger to “find 11,780 votes,” the number of votes Trump needed to win Georgia.

The probe has since investigated and subpoenaed dozens of witnesses including Mark Meadows, Rudy Giuliani, Newt Gingrich, and Michael Flynn. Giuliani, along with 16 Republicans who falsely claimed to be Georgia electors, could face criminal charges.

In a win for those who realize the 2020 election was not rigged, a federal judge on Tuesday also threw out former White House Chief of Staff Meadows’ challenge to a subpoena from the House committee investigating the January 6 attack.

The Supreme Court’s decision is a relief considering it has issued several temporary stays seemingly in favor of former Team Trump in the past week.

Chief Justice John Roberts temporarily halted the release of Trump’s tax returns earlier Tuesday, and Justice Elena Kagan last week temporarily blocked a subpoena from the House January 6 investigative committee for phone and text records of Arizona Republican Party Chair Kelli Ward.

Elon Musk Is Already Threatening to Bankrupt Twitter

Advertisers have been fleeing the platform since Musk's purchase. He thinks a subscription plan will fix everything.

Muhammed Selim Korkutata / Anadolu Agency

Elon Musk has owned Twitter for less than a week, and already the company is bleeding money.

Since the billionaire’s purchase of Twitter, dozens of celebrities and advertisers have said they’re not sure they’ll remain on the social media platform—leading Musk to propose a bizarre new plan for users to pay for verification badges.

“We need to pay the bills somehow! Twitter cannot rely entirely on advertisers,” Musk tweeted Monday after novelist Stephen King dismissed the notion of paying for Twitter verification. “How about $8 [a month]?” Musk asked, seemingly bartering a paid contract in a tweet.

The truth is Twitter is a financial time-bomb.

Musk’s $44 billion deal placed about $13 billion worth of debt onto Twitter. Any cash will likely need to help service that debt, but that cash is looking less and less available.

On Tuesday, advertising giant Interpublic Group recommended its clients (including Coca-Cola, Johnson & Johnson, and Spotify) to temporarily pause activity on Twitter. That recommendation follows an announcement from General Motors last week that it would be suspending advertising until it gets a better idea what direction Twitter is going in.

HBO, among Twitter’s top five advertisers this year, “will be assessing the platform under its new leadership,” before determining next steps. About a dozen clients of advertising agency GroupM threaten to pause all their Twitter ads if former President Donald Trump’s account is reinstated, as some fear Musk may allow.

Given that about 90 percent of Twitter’s revenue comes from advertising, Musk is now haphazardly pushing to make Twitter a subscription service.

On Monday, he tweeted details of his vision. Along with gaining verification, paying $8 per month would apparently show users half as many ads. Again, ads are the biggest source of Twitter’s revenue. A service only a select few would subscribe to—and cutting ad revenue generated by those users in half—wouldn’t balance potential losses if the plan goes awry and disillusions advertisers.

Meanwhile, Musk’s own actions are betraying his statement that Twitter will be “warm and welcoming to all.”

On Tuesday, Musk unilaterally unbanned far-right conspiracy theorist Mark Finchem to appease complaints from online right-wingers. Finchem, who has disputed the 2020 election results and is running to oversee voting in Arizona, is a proud member of the Oath Keepers.

Liz Cheney Endorses Democrat Tim Ryan in Close Ohio Senate Race

This is Cheney's second Democratic nomination this election.

Liz Cheney purses her lips and looks off camera
PATRICK T. FALLON/AFP via Getty Images

Liz Cheney endorsed Democratic Ohio Senate candidate Tim Ryan on Tuesday, her second time crossing the aisle ahead of the contentious midterm elections.

Cheney, who lost the Wyoming Republican representative primary after four terms, has now backed both Ryan and Democratic Michigan Representative Elissa Slotkin.

In an interview with PBS’ Judy Woodruff on Tuesday, during an event in Ohio, Cheney said, “I would not vote for J.D. Vance,” the MAGA Republican candidate.

“So if you were a Buckeye State voter, you’d be voting for Tim Ryan?” Woodruff asked.

“I would,” Cheney replied.

Ryan has sought to cast himself as more of an independent on the campaign trail. He agreed with former President Donald Trump on trade but supports legislation such as increased environmental policy and affordable health care.

Vance rose to prominence with the publication of his bestselling memoir Hillbilly Elegy in 2016. At the time, he was a conservative Trump-skeptic.

Since hitting the campaign trail, Vance has made a stark and unexpected shift to the right, endorsing QAnon conspiracy theories and the lie that the 2020 election was stolen.

Cheney has been widely censured by her own party over her decision to certify the election of President Joe Biden and impeach Trump for a historic second time over the January 6 riot. She was stripped of her committee positions and primaried out of her office, but she currently serves as vice-chair of the House committee investigating the insurrection. She has called her work on the Jan. 6 panel “probably the most important thing” she’s done professionally.

Cheney stands to make a real impact on the race in Ohio, a state crucial for Democrats maintaining their slim hold on Congress. If enough Ohio Republicans and right-leaning independents are anti-MAGA, Cheney’s endorsement of Ryan could push the vote his way.

But her opinion has also sent far-right voters running the other way. On Friday, Cheney released an ad in Arizona attacking the Republican nominees for governor and secretary of state, Kari Lake and Mark Finchem respectively, both of whom are election deniers and conspiracy theorists.

Lake released a statement later that day mockingly thanking Cheney for the “anti-endorsement.”

Lake said that since the ad aired, “our campaign donations are skyrocketing and our website nearly crashed from traffic.”

Suspected Pelosi Attacker Wanted to Use Nancy to “Lure Another Individual”

New evidence reveals that Paul Pelosi's suspected attacker wasn't just looking for the House speaker. He also wanted to lure someone else entirely.

Stefano Costantino/SOPA Images/LightRocket via Getty Images

David DePape’s intrusion into the Pelosi home and violent assault on Paul Pelosi was bad enough. But the attack was just one piece of a larger plan.

In an interview with the San Francisco Police Department, DePape, who now faces two felony charges, said he invaded Nancy Pelosi’s home in the hopes of holding the speaker of the House hostage. Describing Pelosi as the “leader of the pack” of lies told by the Democrats, DePape threatened to break her kneecaps to warn other members of Congress.

But one disturbing detail deserves more attention: DePape wanted to use Pelosi as bait to lure in another individual.

Documents detailing DePape’s interviews do not specify who the individual is. Regardless, this one detail shows the magnitude of the threat. This attack was not just about the woman second in line to the presidency after the vice president, or about her family.

The direct insight into DePape’s motivations also cuts through the baseless conspiracy and lies being peddled by prominent Republicans. No, this attack was not a random crime indicative of the dangers of so-called urban America; nor was it carried out by some left-wing radical, or a gay prostitute.

All signs of DePape’s online activity—conspiracy theories surrounding Covid-19 and the 2020 election, antisemitic posts, concerns with gender identity and anti-white racism—reveal what radical bubbles he settled in. Now, his interviews reveal how the attack could have escalated into something far worse.

DePape has clearly said what motivated him: the desire to capture Nancy Pelosi, harm her to threaten other members of Congress, and use her to lure others into his dangerous hands too. We should take his word for it.