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With Venezuela's
economy having contracted last year (as did the vast majority of
economies in the Western Hemisphere), the economy suffering from
electricity shortages, and the value of domestic currency having
recently fallen sharply in the parallel market, stories of Venezuela's
economic ruin are again making headlines.
The Washington Post, in a news article
that reads more like an editorial, reports that Venezuela is "gripped
by an economic crisis," and that "years of state interventions in the
economy are taking a brutal toll on private business."
There is
one important fact that is almost never mentioned in news articles
about Venezuela, because it does not fit in with the narrative of a
country that has spent wildly throughout the boom years, and will soon,
like Greece,
face its day of reckoning. That is the government's debt level:
currently about 20% of GDP. In other words, even as it was tripling
real social spending per person, increasing access to healthcare and
education, and loaning or giving billions of dollars to other Latin
American countries, Venezuela was reducing its debt burden during the
oil price run-up. Venezuela's public debt fell from 47.5% of GDP in
2003 to 13.8% in 2008. In 2009, as the economy shrank, public debt
picked up to 19.9% of GDP. Even if we include the debt of the state oil
company, PDVSA, Venezuela's public debt is 26% of GDP. The foreign part
of this debt is less than half of the total.
Compare this to
Greece, where public debt is 115% of GDP and currently projected to
rise to 149% in 2013. (The European Union average is about 79%.)
Given
the Venezuelan government's very low public and foreign debt, the idea
the country is facing an "economic crisis" is simply wrong. With oil at
about $80 a barrel, Venezuela is running a sizeable current account
surplus, and has a healthy level of reserves. Furthermore, the
government can borrow internationally as necessary - last month China
agreed to loan Venezuela $20bn in an advance payment for future oil
deliveries.
Nonetheless, the country still faces significant
economic challenges, some of which have been worsened by mistaken
macroeconomic policy choices. The economy shrank by 3.3% last year. The
international press has trouble understanding this, but the problem was
that the government's fiscal policy was too conservative - cutting
spending as the economy slipped into recession. This was a mistake, but
hopefully the government will reverse this quickly with its planned
expansion of public investment this year, including $6bn for
electricity generation.
The government's biggest long-term
economic mistake has been the maintenance of a fixed, overvalued
exchange rate. Although the government devalued the currency in
January, from 2.15 to 4.3 to the dollar for most official foreign
exchange transactions, the currency is still overvalued. The parallel
or black market rate is at more than seven to the dollar.
An
overvalued currency - by making imports artificially cheap and the
country's exports more expensive - hurts Venezuela's non-oil tradable
goods' sectors and prevents the economy from diversifying away from
oil. Worse still, the country's high inflation rate (28% over the last
year, and averaging 21% annually over the last seven years) makes the
currency more overvalued in real terms each year. (The press has
misunderstood this problem, too - the inflation itself is too high, but
the main damage it does to the economy is not from the price increases
themselves but from causing an increasing overvaluation of the real
exchange rate.)
But Venezuela is not in the situation of Greece - or even Portugal, Ireland, or Spain. Or Latvia
or Estonia. The first four countries are stuck with an overvalued
currency - for them, the euro - and implementing pro-cyclical fiscal
policies (eg deficit reduction) that are deepening their recessions
and/or slowing their recovery. They do not have any control over
monetary policy, which rests with the European Central Bank. The latter
two countries are in a similar situation for as long as they keep their
currencies pegged to the euro, and have lost output six to eight times
that of Venezuela over the last two years.
By contrast, Venezuela
controls its own foreign exchange, monetary, and fiscal policies. It
can use expansionary fiscal and monetary policy to stimulate the
economy, and also exchange rate policy - by letting the currency float.
A managed, or "dirty" float - in which the government does not set a
target exchange rate but intervenes when necessary to preserve exchange
rate stability - would suit the Venezuelan economy much better than the
current fixed rate. The government could manage the exchange rate at a
competitive level, and not have to waste so many dollars, as it does
currently, trying to narrow the gap between the parallel and the
official rate. Although there were (as usual, exaggerated) predictions
that inflation would skyrocket with the most recent devaluation, it did
not - possibly because most foreign exchange transactions take place
through the parallel market anyway.
Venezuela is well situated to
resolve its current macroeconomic problems and pursue a robust economic
expansion, as it had from 2003-2008. The country is not facing a
crisis, but rather a policy choice.
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With Venezuela's
economy having contracted last year (as did the vast majority of
economies in the Western Hemisphere), the economy suffering from
electricity shortages, and the value of domestic currency having
recently fallen sharply in the parallel market, stories of Venezuela's
economic ruin are again making headlines.
The Washington Post, in a news article
that reads more like an editorial, reports that Venezuela is "gripped
by an economic crisis," and that "years of state interventions in the
economy are taking a brutal toll on private business."
There is
one important fact that is almost never mentioned in news articles
about Venezuela, because it does not fit in with the narrative of a
country that has spent wildly throughout the boom years, and will soon,
like Greece,
face its day of reckoning. That is the government's debt level:
currently about 20% of GDP. In other words, even as it was tripling
real social spending per person, increasing access to healthcare and
education, and loaning or giving billions of dollars to other Latin
American countries, Venezuela was reducing its debt burden during the
oil price run-up. Venezuela's public debt fell from 47.5% of GDP in
2003 to 13.8% in 2008. In 2009, as the economy shrank, public debt
picked up to 19.9% of GDP. Even if we include the debt of the state oil
company, PDVSA, Venezuela's public debt is 26% of GDP. The foreign part
of this debt is less than half of the total.
Compare this to
Greece, where public debt is 115% of GDP and currently projected to
rise to 149% in 2013. (The European Union average is about 79%.)
Given
the Venezuelan government's very low public and foreign debt, the idea
the country is facing an "economic crisis" is simply wrong. With oil at
about $80 a barrel, Venezuela is running a sizeable current account
surplus, and has a healthy level of reserves. Furthermore, the
government can borrow internationally as necessary - last month China
agreed to loan Venezuela $20bn in an advance payment for future oil
deliveries.
Nonetheless, the country still faces significant
economic challenges, some of which have been worsened by mistaken
macroeconomic policy choices. The economy shrank by 3.3% last year. The
international press has trouble understanding this, but the problem was
that the government's fiscal policy was too conservative - cutting
spending as the economy slipped into recession. This was a mistake, but
hopefully the government will reverse this quickly with its planned
expansion of public investment this year, including $6bn for
electricity generation.
The government's biggest long-term
economic mistake has been the maintenance of a fixed, overvalued
exchange rate. Although the government devalued the currency in
January, from 2.15 to 4.3 to the dollar for most official foreign
exchange transactions, the currency is still overvalued. The parallel
or black market rate is at more than seven to the dollar.
An
overvalued currency - by making imports artificially cheap and the
country's exports more expensive - hurts Venezuela's non-oil tradable
goods' sectors and prevents the economy from diversifying away from
oil. Worse still, the country's high inflation rate (28% over the last
year, and averaging 21% annually over the last seven years) makes the
currency more overvalued in real terms each year. (The press has
misunderstood this problem, too - the inflation itself is too high, but
the main damage it does to the economy is not from the price increases
themselves but from causing an increasing overvaluation of the real
exchange rate.)
But Venezuela is not in the situation of Greece - or even Portugal, Ireland, or Spain. Or Latvia
or Estonia. The first four countries are stuck with an overvalued
currency - for them, the euro - and implementing pro-cyclical fiscal
policies (eg deficit reduction) that are deepening their recessions
and/or slowing their recovery. They do not have any control over
monetary policy, which rests with the European Central Bank. The latter
two countries are in a similar situation for as long as they keep their
currencies pegged to the euro, and have lost output six to eight times
that of Venezuela over the last two years.
By contrast, Venezuela
controls its own foreign exchange, monetary, and fiscal policies. It
can use expansionary fiscal and monetary policy to stimulate the
economy, and also exchange rate policy - by letting the currency float.
A managed, or "dirty" float - in which the government does not set a
target exchange rate but intervenes when necessary to preserve exchange
rate stability - would suit the Venezuelan economy much better than the
current fixed rate. The government could manage the exchange rate at a
competitive level, and not have to waste so many dollars, as it does
currently, trying to narrow the gap between the parallel and the
official rate. Although there were (as usual, exaggerated) predictions
that inflation would skyrocket with the most recent devaluation, it did
not - possibly because most foreign exchange transactions take place
through the parallel market anyway.
Venezuela is well situated to
resolve its current macroeconomic problems and pursue a robust economic
expansion, as it had from 2003-2008. The country is not facing a
crisis, but rather a policy choice.
With Venezuela's
economy having contracted last year (as did the vast majority of
economies in the Western Hemisphere), the economy suffering from
electricity shortages, and the value of domestic currency having
recently fallen sharply in the parallel market, stories of Venezuela's
economic ruin are again making headlines.
The Washington Post, in a news article
that reads more like an editorial, reports that Venezuela is "gripped
by an economic crisis," and that "years of state interventions in the
economy are taking a brutal toll on private business."
There is
one important fact that is almost never mentioned in news articles
about Venezuela, because it does not fit in with the narrative of a
country that has spent wildly throughout the boom years, and will soon,
like Greece,
face its day of reckoning. That is the government's debt level:
currently about 20% of GDP. In other words, even as it was tripling
real social spending per person, increasing access to healthcare and
education, and loaning or giving billions of dollars to other Latin
American countries, Venezuela was reducing its debt burden during the
oil price run-up. Venezuela's public debt fell from 47.5% of GDP in
2003 to 13.8% in 2008. In 2009, as the economy shrank, public debt
picked up to 19.9% of GDP. Even if we include the debt of the state oil
company, PDVSA, Venezuela's public debt is 26% of GDP. The foreign part
of this debt is less than half of the total.
Compare this to
Greece, where public debt is 115% of GDP and currently projected to
rise to 149% in 2013. (The European Union average is about 79%.)
Given
the Venezuelan government's very low public and foreign debt, the idea
the country is facing an "economic crisis" is simply wrong. With oil at
about $80 a barrel, Venezuela is running a sizeable current account
surplus, and has a healthy level of reserves. Furthermore, the
government can borrow internationally as necessary - last month China
agreed to loan Venezuela $20bn in an advance payment for future oil
deliveries.
Nonetheless, the country still faces significant
economic challenges, some of which have been worsened by mistaken
macroeconomic policy choices. The economy shrank by 3.3% last year. The
international press has trouble understanding this, but the problem was
that the government's fiscal policy was too conservative - cutting
spending as the economy slipped into recession. This was a mistake, but
hopefully the government will reverse this quickly with its planned
expansion of public investment this year, including $6bn for
electricity generation.
The government's biggest long-term
economic mistake has been the maintenance of a fixed, overvalued
exchange rate. Although the government devalued the currency in
January, from 2.15 to 4.3 to the dollar for most official foreign
exchange transactions, the currency is still overvalued. The parallel
or black market rate is at more than seven to the dollar.
An
overvalued currency - by making imports artificially cheap and the
country's exports more expensive - hurts Venezuela's non-oil tradable
goods' sectors and prevents the economy from diversifying away from
oil. Worse still, the country's high inflation rate (28% over the last
year, and averaging 21% annually over the last seven years) makes the
currency more overvalued in real terms each year. (The press has
misunderstood this problem, too - the inflation itself is too high, but
the main damage it does to the economy is not from the price increases
themselves but from causing an increasing overvaluation of the real
exchange rate.)
But Venezuela is not in the situation of Greece - or even Portugal, Ireland, or Spain. Or Latvia
or Estonia. The first four countries are stuck with an overvalued
currency - for them, the euro - and implementing pro-cyclical fiscal
policies (eg deficit reduction) that are deepening their recessions
and/or slowing their recovery. They do not have any control over
monetary policy, which rests with the European Central Bank. The latter
two countries are in a similar situation for as long as they keep their
currencies pegged to the euro, and have lost output six to eight times
that of Venezuela over the last two years.
By contrast, Venezuela
controls its own foreign exchange, monetary, and fiscal policies. It
can use expansionary fiscal and monetary policy to stimulate the
economy, and also exchange rate policy - by letting the currency float.
A managed, or "dirty" float - in which the government does not set a
target exchange rate but intervenes when necessary to preserve exchange
rate stability - would suit the Venezuelan economy much better than the
current fixed rate. The government could manage the exchange rate at a
competitive level, and not have to waste so many dollars, as it does
currently, trying to narrow the gap between the parallel and the
official rate. Although there were (as usual, exaggerated) predictions
that inflation would skyrocket with the most recent devaluation, it did
not - possibly because most foreign exchange transactions take place
through the parallel market anyway.
Venezuela is well situated to
resolve its current macroeconomic problems and pursue a robust economic
expansion, as it had from 2003-2008. The country is not facing a
crisis, but rather a policy choice.
Demonstrators yelled at federal agents to "get off our streets" as they set up a police checkpoint on a popular street in the nation's capital.
More than 100 protesters gathered late Wednesday at a checkpoint set up by a combination of local and federal officers on a popular street in Washington, D.C., where U.S. President Donald Trump has taken over the police force and deployed around 800 National Guard members as part of what he hopes will be a long-term occupation of the country's capital—and potentially other major cities.
The officers at the Wednesday night checkpoint reportedly included agents from the U.S. Department of Homeland Security, which is also taking part in immigration raids in the city. Some agents were wearing face coverings to conceal their identities.
After law enforcement agents established the checkpoint on 14th Street, protesters gathered and jeered the officers, chanting "get off our streets" and "go home fascists." Some demonstrators yelled at the agents standing at the checkpoint, while others warned oncoming drivers to turn to avoid the police installation.
There was no officially stated purpose for the checkpoint, but it came amid the Trump administration's lawless mass deportation campaign and its broader threats to deploy U.S. troops on the streets of American cities to crush dissent.
At least one person, a Black woman, was arrested at Wednesday's checkpoint. One D.C. resident posted to Reddit that agents were "pulling people out of cars who are 'suspicious' or if they don't like the answers to their questions." The Washington Post reported that a "mix of local and federal authorities pulled over drivers for seat belt violations or broken taillights."
The National Guard troops activated by Trump this week were not seen at the checkpoint, which shut down before midnight.
Wednesday night's protests are expected to be just the start as public anger mounts over Trump's authoritarian actions in the nation's capital—where violent crime fell to a 30-year low last year—and across the country.
Radley Balko, a journalist who has documented the growing militarization of U.S. police, wrote earlier this week that "the motivation for Donald Trump's plan to 'federalize' Washington, D.C., is same as his motivation for sending active-duty troops into Los Angeles, deporting people to the CECOT torture prison in El Salvador, his politicization of the Department of Justice, and nearly every other authoritarian overreach of the last six months: He is testing the limits of his power—and, by extension, of our democracy."
"He's feeling out what the Supreme Court, Congress, and the public will let him get away with. And so far, he's been able to do what he pleases," Balko wrote. "We are now past the point of crisis. Trump has long dreamed of presiding over a police state. He has openly admired and been reluctant to criticize foreign leaders who helm one. He has now appointed people who have expressed their willingness to help him achieve one to the very positions with the power to make one happen. And both he and his highest-ranking advisers have both openly spoken about and written out their plans to implement one."
"It's time to believe them," Balko added.
One critic accused the president of "testing the limits of his power, hoping to intimidate other cities into submission to his every vengeful whim."
The Trump administration's military occupation of Washington, D.C. is expected to expand, a White House official said Wednesday, with President Donald Trump also saying he will ask Congress to approve a "long-term" extension of federal control over local police in the nation's capital.
The unnamed Trump official told CNN that a "significantly higher" number of National Guard troops are expected on the ground in Washington later Wednesday to support law enforcement patrols in the city.
"The National Guard is not arresting people," the official said, adding that troops are tasked with creating "a safe environment" for the hundreds of federal officers and agents from over a dozen agencies who are fanning out across the city over the strong objection of local officials.
Trump dubiously declared a public safety emergency Monday in order to take control of Washington police under Section 740 of the District of Columbia Self-Government and Governmental Reorganization Act. The president said Wednesday that he would ask the Republican-controlled Congress to authorize an extension of his federal takeover of local police beyond the 30 days allowed under Section 740.
"Already they're saying, 'He's a dictator,'" Trump said of his critics during remarks at the Kennedy Center in Washington. "The place is going to hell. We've got to stop it. So instead of saying, 'He's a dictator,' they should say, 'We're going to join him and make Washington safe.'"
According to official statistics, violent crime in Washington is down 26% from a year ago, when it was at its second-lowest level since 1966,
House Speaker Mike Johnson (R-La.) and Senate Majority Leader John Thune (R-S.D.) have both expressed support for Trump's actions. However, any legislation authorizing an extension of federal control over local police would face an uphill battle in the Senate, where Democratic lawmakers can employ procedural rules to block the majority's effort.
Trump also said any congressional authorization could open the door to targeting other cities in his crosshairs, including Baltimore, Chicago, Los Angeles, New York, and Oakland. Official statistics show violent crime trending downward in all of those cities—with some registering historically low levels.
While some critics have called Trump's actions in Washington a distraction from his administration's mishandling of the Jeffrey Epstein scandal, others say his occupation of the nation's capital is a test case to see what he can get away with in other cities.
Kat Abughazaleh, a Democratic candidate for Congress in Illinois, said Monday that the president's D.C. takeover "is another telltale sign of his authoritarian ambitions."
Some opponents also said Trump's actions are intended to intimidate Democrat-controlled cities, pointing to his June order to deploy thousands of National Guard troops to Los Angeles in response to protests against his administration's mass deportation campaign.
Testifying Wednesday at a San Francisco trial to determine whether Trump violated the Posse Comitatus Act of 1878—which generally prohibits use of the military for domestic law enforcement—by sending troops to Los Angeles, California Deputy Attorney General Meghan Strong argued that the president wanted to "strike fear into the hearts of Californians."
Roosevelt University political science professor and Newsweek contributor David Faris wrote Wednesday that "deploying the National Guard to Washington, D.C. is an unconscionable abuse of federal power and another worrisome signpost on our road to autocracy."
"Using the military to bring big, blue cities to heel, exactly as 'alarmists' predicted during the 2024 campaign, isn't about a crisis in D.C.—violent crime is actually at a 30-year low," he added. "President Trump is, once again, testing the limits of his power, hoping to intimidate other cities into submission to his every vengeful whim by making the once unimaginable—an American tyrant ordering a military occupation of our own capital—a terrifying reality."
"Underneath shiny motherhood medals and promises of baby bonuses is a movement intent on elevating white supremacist ideology and forcing women out of the workplace," said one advocate.
The Trump administration's push for Americans to have more children has been well documented, from Vice President JD Vance's insults aimed at "childless cat ladies" to officials' meetings with "pronatalist" advocates who want to boost U.S. birth rates, which have been declining since 2007.
But a report released by the National Women's Law Center (NWLC) on Wednesday details how the methods the White House have reportedly considered to convince Americans to procreate moremay be described by the far right as "pro-family," but are actually being pushed by a eugenicist, misogynist movement that has little interest in making it any easier to raise a family in the United States.
The proposals include bestowing a "National Medal of Motherhood" on women who have more than six children, giving a $5,000 "baby bonus" to new parents, and prioritizing federal projects in areas with high birth rates.
"Underneath shiny motherhood medals and promises of baby bonuses is a movement intent on elevating white supremacist ideology and forcing women out of the workplace," said Emily Martin, chief program officer of the National Women's Law Center.
The report describes how "Silicon Valley tech elites" and traditional conservatives who oppose abortion rights and even a woman's right to work outside the home have converged to push for "preserving the traditional family structure while encouraging women to have a lot of children."
With pronatalists often referring to "declining genetic quality" in the U.S. and promoting the idea that Americans must produce "good quality children," in the words of evolutionary psychologist Diana Fleischman, the pronatalist movement "is built on racist, sexist, and anti-immigrant ideologies."
If conservatives are concerned about population loss in the U.S., the report points out, they would "make it easier for immigrants to come to the United States to live and work. More immigrants mean more workers, which would address some of the economic concerns raised by declining birth rates."
But pronatalists "only want to see certain populations increase (i.e., white people), and there are many immigrants who don't fit into that narrow qualification."
The report, titled "Baby Bonuses and Motherhood Medals: Why We Shouldn't Trust the Pronatalist Movement," describes how President Donald Trump has enlisted a "pronatalist army" that's been instrumental both in pushing a virulently anti-immigrant, mass deportation agenda and in demanding that more straight couples should marry and have children, as the right-wing policy playbook Project 2025 demands.
Trump's former adviser and benefactor, billionaire tech mogul Elon Musk, has spoken frequently about the need to prevent a collapse of U.S. society and civilization by raising birth rates, and has pushed misinformation fearmongering about birth control.
Transportation Secretary Sean Duffy proposed rewarding areas with high birth rates by prioritizing infrastructure projects, and like Vance has lobbed insults at single women while also deriding the use of contraception.
The report was released days after CNN detailed the close ties the Trump administration has with self-described Christian nationalist pastor Doug Wilson, who heads the Communion of Reformed Evangelical Churches, preaches that women should not vote, and suggested in an interview with correspondent Pamela Brown that women's primary function is birthing children, saying they are "the kind of people that people come out of."
Wilson has ties to Defense Secretary Pete Hegseth, whose children attend schools founded by the pastor and who shared the video online with the tagline of Wilson's church, "All of Christ for All of Life."
But the NWLC noted, no amount of haranguing women over their relationship status, plans for childbearing, or insistence that they are primarily meant to stay at home with "four or five children," as Wilson said, can reverse the impact the Trump administration's policies have had on families.
"While the Trump administration claims to be pursuing a pro-baby agenda, their actions tell a different story," the report notes. "Rather than advancing policies that would actually support families—like lowering costs, expanding access to housing and food, or investing in child care—they've prioritized dismantling basic need supports, rolling back longstanding civil rights protections, and ripping away people's bodily autonomy."
The report was published weeks after Trump signed the One Big Beautiful Bill Act into law—making pregnancy more expensive and more dangerous for millions of low-income women by slashing Medicaid funding and "endangering the 42 million women and children" who rely on the Supplemental Nutrition Assistance Program for their daily meals.
While demanding that women have more children, said the NWLC, Trump has pushed an "anti-women, anti-family agenda."
Martin said that unlike the pronatalist movement, "a real pro-family agenda would include protecting reproductive healthcare, investing in childcare as a public good, promoting workplace policies that enable parents to succeed, and ensuring that all children have the resources that they need to thrive not just at birth, but throughout their lives."
"The administration's deep hostility toward these pro-family policies," said Martin, "tells you all that you need to know about pronatalists' true motives.”