The Pronk Pops Show Podcasts
Story 1: Conservatives Cheer Cruz Candidacy — Faith, Family, Friends, Freedom ~ First — Videos
2016 Republican Presidential Nomination
||1/25 – 3/15
||3/13 – 3/15
||3/1 – 3/4
||2/26 – 3/2
||2/20 – 2/22
||1/25 – 1/27
• Presidential Candidate Ted Cruz • One-On-One • Hannity • 3/23/15 •
Ted Cruz announces presidential bid at Liberty University
Ted Cruz Liberty University FULL SPEECH Ted Cruz Announces He’s Running For President 2016
Senator Ted Cruz of Texas on Monday formally announced his candidacy for the 2016 Republican presidential nomination, promising a campaign that would be about “re-igniting the promise of America.” Ted Cruz Becomes First Major Candidate to Announce Presidential Bid for 2016. Ted Cruz Opens 2016 As the Election’s Self-Declared Conservative Champion
The Texas senator and presidential candidate kicked off his “The power of the American people as we stand up and fight for liberty knows no bounds,” Mr. Cruz said during a speech at Liberty University in Lynchburg, Va., in which he talked at length about his family and his faith as he laid out a case for his candidacy.
imagine you compiled a list of all the things Cruz asked his young audience to “imagine” being fulfilled through his presidency: “…millions of courageous conservatives rising up to say in unison, ‘we demand our liberty.’” “…millions of people in faith all across America coming out to the polls and voting our values.” “…millions of young people standing together saying ‘We will stand for liberty.’” “…booming economic growth” “…record number of small businesses” “…young people coming out of college with four, five, six job offers” (lulz) “…innovation thriving on the internet as government regulators and tax collectors are kept at bay.” “…America finally becoming energy self-sufficient.” “…a new president signing legislation repealing every word of Obamacare.” “…health care reform that keeps government out of the way of your and your doctor.” “…a simple flat tax.” “…abolishing the IRS.” “…a president that finally, finally, finally secures the borders.” “…a legal immigration that welcomes and celebrates those who come to achieve the America dream.” “…a federal government that stands for the First Amendment rights of every American.” “…a federal government that works to defend the sanctity of life and to uphold the sacrament of marriage.” “…a federal government that fights to keep the right to bear arms.” “…a federal government that protected the privacy rights of every American.” “…repealing every word of Common Core.” “…embracing school choice as the civil rights issue of the next generation.” “…a president who stands unapologetically with the nation of Israel.” “…a president who says I will honor the Constitution and under no circumstances will Iran be allowed to acquire a nuclear weapon.” “…a president who says we will stand up and defeat radical Islamic terrorism.” “…it’s 1775.” “…it’s 1777.” “…it’s 1943.” “…it’s 1979.”
Drawing on a stump speech he has developed in recent months, Mr. Cruz struck a tone of defiance and appealed to conservatives to “imagine a president” who would repeal the Affordable Care Act, abolish the Internal Revenue Service, secure the border and forbid same-sex marriage.
His criticism of President Obama also extended to foreign policy, where he denounced the administration’s positions on Israel, Iran’s nuclear program and Islamic extremism.
Related Coverage Mr. Cruz made his case to a gathering of conservative activists at an annual gathering in February. Ted Cruz’s Path to the Presidency MARCH 23, 2015 Senator Ted Cruz brought his daughters, Catherine, 4, right, and Caroline, 6, on stage at Liberty University on Sunday during a walk-through for his speech Monday, when he will start his presidential campaign. Road to 2016: Why Ted Cruz Is Such a Long Sho tMARCH 23, 2015 Senator Ted Cruz at a rehearsal on Sunday for his formal campaign announcement at Liberty University in Lynchburg, Va. Things You May Not Know About Ted Cruz MARCH 23, 2015 Senator Ted Cruz is the first Republican to officially enter the presidential race. Ted Cruz Hopes Early Campaign Entry Will Focus Voters’ Attention
Cruz launches 2016 presidential campaign with fiery speech Fox News Video
Senator Ted Cruz Announces Running For U.S. President in 2016 ‘Imagine’ Full Speech (VIDEO)
Sen. Cruz: Obama Counterfeiting Immigration Documents – 2/17/2015
Ted Cruz’ solution to Obama’s illegal actions on immigration
Sen. Ted Cruz Speaks on the Senate Floor in Opposition to the Gang of Eight’s Immigration Bill
Sen Ted Cruz Wants to DOUBLE Immigration
Laura Ingraham is “pretty sure” Ted Cruz is eligible to be President
Immigration by the Numbers — Off the Charts
Sen. Cruz Amendment to Immigration Legislation to Increase H-1B Visas
Ted Cruz announces candidacy for President in 2016
Analyzing Sen. Ted Cruz’s first speech after announcing 2016 bid
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Analyzing Sen. Ted Cruz’s first speech after announcing 2016 bid
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Transcript: Read Full Text of Sen. Ted Cruz’s Campaign Launch
Cruz served as a law clerk to J. Michael Luttig of the United States Court of Appeals for the Fourth Circuit in 1995 and William Rehnquist, Chief Justice of the United States in 1996. Cruz was the first Hispanic to clerk for a Chief Justice of the United States.
After Cruz finished his clerkships, he took a position with Cooper, Carvin & Rosenthal, which is now known as Cooper & Kirk, LLC, from 1997 to 1998. While with the firm, Cruz worked on matters relating to the National Rifle Association, and helped prepare testimony for the impeachment proceedings against President Clinton. Cruz also served as private counsel for CongressmanJohn Boehner during Boehner’s lawsuit against Congressman Jim McDermott for releasing a tape recording of a Boehner telephone conversation.
Cruz joined the George W. Bush presidential campaign in 1999 as a domestic policy adviser, advising then-Governor George W. Bush on a wide range of policy and legal matters, including civil justice, criminal justice, constitutional law, immigration, and government reform.
Cruz assisted in assembling the Bush legal team, devise strategy, and draft pleadings for filing with the Supreme Court of Floridaand U.S. Supreme Court, the specific case being Bush v. Gore, during the 2000 Florida presidential recounts, leading to two successful decisions for the Bush team. Cruz recruited future Chief Justice John Roberts and noted attorney Mike Carvin to the Bush legal team.
After President Bush took office, Cruz served as an associate deputy attorney general in the U.S. Justice Department and as the director of policy planning at the U.S. Federal Trade Commission.
Texas Solicitor General
Appointed to the office of Solicitor General of Texas by Texas Attorney General Greg Abbott, Cruz served in that position from 2003 to 2008. The office had been established in 1999 to handle appeals involving the state, but Abbott hired Cruz with the idea that Cruz would take a “leadership role in the United States in articulating a vision of strict construction.” As Solicitor General, Cruz would argue before the Supreme Court nine times, winning five cases and losing four.
Cruz has authored 70 United States Supreme Court briefs and presented 43 oral arguments, including nine before the United States Supreme Court. Cruz’s record of having argued before the Supreme Court nine times is more than any practicing lawyer in Texas or any current member of Congress. Cruz has commented on his nine cases in front of the U.S. Supreme Court: “We ended up year after year arguing some of the biggest cases in the country. There was a degree of serendipity in that, but there was also a concerted effort to seek out and lead conservative fights.”
In the landmark case of District of Columbia v. Heller, Cruz drafted the amicus brief signed by attorneys general of 31 states, which said that the D.C. handgun ban should be struck down as infringing upon the Second Amendment right to keep and bear arms. Cruz also presented oral argument for the amici states in the companion case to Heller before the United States Court of Appeals for the District of Columbia Circuit.
In addition to his success in Heller, Cruz has successfully defended the constitutionality of the Ten Commandments monument on the Texas State Capitol grounds before the Fifth Circuit and the U.S. Supreme Court, winning 5-4 in Van Orden v. Perry.
In 2004, Cruz was involved in the high-profile case, Elk Grove Unified School District v. Newdow, in which Cruz wrote a U.S. Supreme Court brief on behalf of all 50 states. The Supreme Court upheld the position of Cruz’s brief.
Cruz served as lead counsel for the state and successfully defended the multiple litigation challenges to the 2003 Texas congressional redistricting plan in state and federal district courts and before the U.S. Supreme Court, which was decided 5-4 in his favor in League of United Latin American Citizens v. Perry.
Cruz also successfully defended, in Medellin v. Texas, the State of Texas against an attempt to re-open the cases of 51 Mexican nationals, all of whom were convicted of murder in the United States and were on death row. With the support of the George W. Bush Administration, the petitioners argued that the United States had violated the Vienna Convention on Consular Relations by failing to notify the convicted nationals of their opportunity to receive legal aid from the Mexican consulate. They based their case on a decision of the International Court of Justice in the Avena case which ruled that failing to allow access to the Mexican consulate, the US had breached its obligations under the Convention. Texas won the case in a 6-3 decision, the Supreme Court held that ICJ decisions were not binding in domestic law and that the President had no power to enforce them.
Cruz has been named by American Lawyer magazine as one of the 50 Best Litigators under 45 in America, by The National Law Journal as one of the 50 Most Influential Minority Lawyers in America, and by Texas Lawyer as one of the 25 Greatest Texas Lawyers of the Past Quarter Century.
After leaving the Solicitor General position in 2008, he worked in a private law firm in Houston, Morgan, Lewis & Bockius LLP, often representing corporate clients, until he was sworn in a U.S. Senator from Texas in 2013. At Morgan Lewis, he led the firm’s U.S. Supreme Court and national appellate litigation practice.
In 2009-2010, while working for Morgan Lewis, Cruz formed and then abandoned a bid for state attorney general when the incumbent Attorney General Greg Abbott, who hired Cruz as Solicitor General, decided to run for re-election.
Cruz speaking to the Values Voters Summit in October 2011
Cruz’s election has been described by the Washington Post as “the biggest upset of 2012 . . . a true grassroots victory against very long odds.” On January 19, 2011, after U.S. Senator Kay Bailey Hutchison said she would not seek reelection, Cruz announced his candidacy via a blogger conference call. In the Republican senatorial primary, Cruz ran against sitting Lieutenant Governor David Dewhurst. Cruz was endorsed first by former Alaska Governor Sarah Palin and then by the Club for Growth, a fiscally conservative political action committee; Erick Erickson, editor of prominent conservative blog RedState; the FreedomWorks for America super PAC; nationally syndicated radio host Mark Levin; former Attorney General Edwin Meese; Tea Party Express; Young Conservatives of Texas; and U.S. Senators Tom Coburn, Jim DeMint, Mike Lee, Rand Paul and Pat Toomey. He was also endorsed by former Alaska Governor Sarah Palin and former Texas Congressman Ron Paul, George P. Bush, and former U.S. Senator from Pennsylvania Rick Santorum.
Cruz won the runoff for the Republican nomination with a 14-point margin over Dewhurst. In the November 6 general election, Cruz faced Democrat Paul Sadler, an attorney and a former state representative from Henderson, in east Texas. Cruz won with 4.5 million votes (56.4%) to Sadler’s 3.2 million (40.6%). Two minor candidates garnered the remaining 3% of the vote. According to a poll by Cruz’s pollster Wilson Perkins Allen Opinion Research, taken six weeks after the 2012 general election, Cruz received 40% of the Hispanic vote, vs. 60% for Sandler, outperforming Republican Presidential candidate Mitt Romney with the Hispanic vote by 6 points.
After Time magazine reported on a potential violation of ethics rules by failing to publicly disclose his financial relationship with Caribbean Equity Partners Investment Holdings during the 2012 campaign, Cruz called his failure to disclose these connections an inadvertent omission.
Cruz is pro-life, with an exception only when a pregnancy endangers the mother’s life. Cruz opposes same-sex marriage, stating that he instead supports marriage “between one man and one woman,” but believes that the legality of same-sex marriage should be left to each state to decide. On February 10, 2015, Cruz re-introduced the State Marriage Defense Act.
Cruz is a gun-rights supporter. On March 25, 2013, an announcement was made by Cruz and U.S. Senators Rand Paul and Mike Lee threatening that they would filibuster any legislation that would entail gun control, such as the Manchin-Toomey Amendment, which would require additional background checks on sales at gun shows. On April 17, 2013, Cruz voted against the Manchin-Toomey Amendment. Republicans successfully filibustered the amendment by a vote of 54–46, as 60 votes were needed for cloture.
Cruz has raised concerns that the National Security Agency has not done effective surveillance of potential terrorists while intruding needlessly into the lives of ordinary Americans.
Cruz opposes net neutrality because he argues that the Internet economy has flourished in the United States simply because it has remained largely free from government regulation. He believes regulating the Internet will stifle online innovation and create monopolies. He has expressed support for stripping theFederal Communications Commission (FCC) of its power under Section 706 of the Telecommunications Act of 1996 to ensure net neutrality, and opposes reclassifying internet service providers as common carriers under Title II of the Communications Act of 1934.
Cruz opposes the Marketplace Fairness Act, saying that it would hurt competition by creating additional costs for internet-based businesses.
He was an original co-sponsor of the Keystone XL Pipeline Act, Senate Bill 1 of the 114th Congress. And on January 29, 2015, he voted for its passage. It passed the Senate 62-36, the goal of the bill was to approve the construction of the transnational pipeline. Cruz wants Congress to approve the exportation of U.S. natural gas to World Trade Organization countries.
Cruz opposes the legalization of marijuana, but believes it should be decided at the state level.
Since being elected, Cruz has spent a great deal of time speaking about what he characterizes as the misguided economic policies of the Obama Administration. Chiding the GOP over its 2012 electoral losses, he stated that “Republicans are and should be the party of the 47 percent”  and has also noted that the words “growth and opportunity” ought to be tattooed on every Republican’s hand.
In February 2014, Cruz opposed an unconditional increase in the debt limit. He said that Republican politicians feared the truth and “they wanted to be able to tell what they view as their foolish, gullible constituents back home they didn’t do it.”
On foreign policy, Cruz has said that he is “somewhere in between” Rand Paul‘s isolationism and John McCain‘s active interventionism.
In 2004, he criticized Democratic Presidential candidate John Kerry for being “against defending American values, against standing up to our enemies, and, in effect, for appeasing totalitarian despots.”  Cruz helped defeat efforts to ratify the Convention on the Rights of Persons with Disabilities, arguing that the treaty infringed on US sovereignty.
In 2013, Cruz stated that America had no “dog in the fight” during the Syrian civil war and stated that America’s armed forces should not serve as “al-Qaeda‘s air force”. In 2014, Cruz criticized the Obama administration: “The president’s foreign policy team utterly missed the threat of ISIS, indeed, was working to arm Syrian rebels that were fighting side by side with ISIS.”, calling ISIS “the face of evil”. Cruz has called for bombing ISIS, but is doubtful that the United States “can tell the good guys from the bad guys” in a plan to arm “moderate” rebels, and the plan to defeat ISIS should not be “laden with impractical contingencies, such as resolving the Syrian civil war.”
In 2014, Cruz spoke at an event held by the watchdog group In Defense of Christians (IDC). Cruz was booed by the group after making statements considered pro-Israel that were viewed by some pundits as intentionally provocative. When the audience refused to stop booing, Cruz eventually left the stage. The resulting controversy expanded beyond Cruz and some commentators believe has resulted in the conservative movement becoming divided between those who sided with Cruz and Israel, and those who sided with Middle Eastern Christians and argued that Cruz’s comments were out-of-bounds. Republican representative Charlie Dent labeled Cruz’s actions “outrageous and incendiary”. Others who criticized Cruz included Mollie Hemingway and Ross Douthat, as well as Scott McConnell, who claimed the controversy was about more than just Cruz, suggesting it is already causing a schism within the conservative movement over issues relating to Israel and Middle Eastern Christians. Matthew Yglesias described the controversy as a “conservative war”. Cruz apologized for questioning the motives of his critics and said that all should be united in speaking out against persecution of religious minorities.
Cruz is a strong critic of the Patient Protection and Affordable Care Act, which he usually refers to as “Obamacare”. He has sponsored legislation that would repeal the health care reform law and its amendments in the Health Care and Education Reconciliation Act of 2010.
After the launch of the HealthCare.gov website, Cruz stated, “Obamacare is a disaster. You have the well-publicized problems with the website. It just isn’t working.” He called for Health and Human Services Secretary Kathleen Sebelius to resign.
In 2014 Cruz gave majority leader Harry Reid the procedural opening he needed to allow a Senate vote to confirm Vivek Murthy, who had raised concerns about the health effects of gun ownership, to be United States Surgeon General.
In the summer of 2013, Cruz started a “nationwide tour” sponsored by The Heritage Foundation to promote a congressional effort to defund the Patient Protection and Affordable Care Act, arguing that a shutdown of the government would not be a disaster for America or the Republican Party (GOP).
On September 24, 2013, Cruz began a speech on the floor of the Senate regarding the Affordable Care Act relative to a continuing resolution designed to fund the government and avert a government shutdown. Cruz promised to keep speaking until he was “no longer able to stand”. Cruz yielded the floor at noon the following day for the start of the proceeding legislative session after twenty-one hours nineteen minutes. His speech was the fourth-longest in United States Senate history. Following Cruz’s speech, the Senate voted 100–0 regarding a “procedural hurdle toward passing a stopgap funding bill to avert a government shutdown”. Cruz was joined by 18 Republican senators in his effort to prevent stripping out a clause that would have defunded the Affordable Care by voting against the cloture motion, leaving the effort 21 votes short of the required number to deny cloture.
Cruz is believed to be a major force behind the U.S. government shutdown in 2013. Cruz delivered a message on October 11, 2013 to fellow Republicans against accepting Obamacare and, describing it as a “train wreck”, claimed the American people remain “energized” around the goal of gutting the law. Cruz stated Obamacare is causing “enormous harm” to the economy. Republican strategist Mike Murphy stated: “Cruz is trying to start a wave of Salem witch trials in the G.O.P. on the shutdown and Obamacare, and that fear is impacting some people’s calculations on 2016.” Cruz said that he “didn’t threaten to shut down the government” and blamed the shutdown on President Barack Obama and Senate Majority Leader Harry M. Reid.
The Houston Chronicle which had endorsed Cruz in the general election, regretted that he had not lived up to the standard set by the previous U.S. Senator from Texas, Kay Bailey Hutchison. After a deal was made to end the shutdown and to extend the debt-ceiling deadline, Senate Republican leader Mitch McConnell called Cruz’s actions “not a smart play” and a “tactical error”, and Cruz stated: “I would do anything, and I will continue to do anything I can, to stop the train wreck that is Obamacare. The test that matters. . . is are we doing anything for all the people that are getting hurt from Obamacare?”
Cruz has sponsored 25 bills of his own, including:
- S.177, a bill to repeal the Patient Protection and Affordable Care Act and the health-care related provisions of the Health Care and Education Reconciliation Act of 2010, introduced January 29, 2013
- S.505, a bill to prohibit the use of drones to kill citizens of the United States within the United States, introduced March 7, 2013
- S.729 and S. 730, bills to investigate and prosecute felons and fugitives who illegally purchase firearms, and to prevent criminals from obtaining firearms through straw purchases and trafficking, introduced March 15, 2013
- S.1336, a bill to permit States to require proof of citizenship for registering to vote in federal elections, introduced July 17, 2013
- S.2170, a bill to increase coal, natural gas, and crude oil exports, to approve the construction of the Keystone XL Pipeline, to expand oil drilling offshore, onshore, in the National Petroleum Reserve–Alaska, and in Indian reservations, to give states the sole power of regulating hydraulic fracturing, to repeal theRenewable Fuel Standard, to prohibit the Environmental Protection Agency (EPA) from regulating greenhouse gases, to require the EPA to assess how new regulations will affect employment, and to earmark natural resource revenue to paying off the federal government’s debt, introduced March 27, 2014
- S.2415, a bill to amend the Federal Election Campaign Act of 1971 to eliminate all limits on direct campaign contributions to candidates for public office, introduced June 3, 2014
Senate bill 2195
On April 1, 2014, Cruz introduced Senate bill 2195, a bill that would allow the President of the United States to deny visas to any ambassador to the United Nationswho has been found to have been engaged in espionage activities or a terrorist activity against the United States or its allies and may pose a threat to U.S. national security interests. The bill was written in response to Iran‘s choice of Hamid Aboutalebi as their ambassador. Aboutalebi was involved in the Iran hostage crisis, in which of a number of American diplomats from the US embassy in Tehran were held captive in 1979.
Under the headline “A bipartisan message to Iran”, Cruz thanked President Barack Obama for signing his bill S 2195 into law. The letter published in the magazinePolitico on April 18, 2014 starts with “Thanks to President Obama for joining a unanimous Congress and signing S 2195 into law”. Cruz also thanked senators from both political parties for “swiftly passing this legislation and sending it to the White House.”
Senator Cruz speaking at the 2014 Conservative Political Action Conference (CPAC) in National Harbor, Maryland.
Commentators have expressed their opinion that Cruz will run for President in 2016. On March 14, 2013, Cruz gave the keynote speech at the 2013 Conservative Political Action Conference in Washington DC. He came in tied for 7th place in the 2013 CPAC straw poll on March 16, winning 4% of the votes cast. In October 2013, Cruz won the Values Voter Summit Presidential straw poll with 42% of the vote. Cruz came in first place in the two most recent Presidential straw polls conducted in 2014 with 30.33% of the vote at the Republican Leadership Conference and 43% of the vote at the Republican Party of Texas state convention.
Cruz did speaking events in the summer of 2013 across Iowa, New Hampshire and South Carolina, early primary states, leading to speculation that he was laying the groundwork for a run for President in 2016. Legal analyst Jeffrey Toobindescribes Cruz as the first potential Presidential candidate to emphasize originalism as a major national issue.
Since Cruz was born in Canada, commentators for the Austin American-Statesman and the Los Angeles Times, have speculated about Cruz’s legal status as a natural-born citizen. Because he was a U.S. citizen at birth (his mother was a U.S. citizen who lived in the U.S. for more than 10 years as required by the Nationality Act of 1940), most commentators believe Cruz is eligible to serve as President of the United States.
On April 12, 2014, Cruz spoke at the Freedom Summit, an event organized by Americans for Prosperity, and Citizens United. The event was attended by several potential presidential candidates. In his speech, Cruz mentioned that Latinos, young people and single mothers, are the people most affected by the recession, and that the Republican Party should make outreach efforts to these constituents. He also said that the words “growth and opportunity” should be tattooed on the hands of every Republican politician.
On March 23, 2015, Cruz announced on his Twitter page “I’m running for President and I hope to earn your support!”. He is the first announced major Republican presidential candidate for the 2016 campaign.
Rick Manning of Americans for Limited Government in The Hill, on December 27, 2013, named Cruz “2013 Person of the Year.” Manning stated that “of course, Cruz made his biggest mark when he and fellow freshman Sen. Mike Lee (R-Utah) led a last-ditch national grassroots effort to defund ObamaCare before the law went into effect fully. Imagine how many Senate Democrats wish right now that they had heeded Cruz’s entreaties and agreed to delaying or defunding it for one year. Now, they are stuck with the law and all its consequences.”
Cruz was also named “2013 Man of the Year” by TheBlaze, FrontPage Magazine and The American Spectator,“2013 Conservative of the Year” by Townhall.com, “2013 Statesman of the Year” by the Republican Party of Sarasota County, Florida and was a finalist in both “2013 Texan of the Year” by The Dallas Morning News and a “2013 Person of the Year” finalist by Time.
Cruz and his wife, Heidi Cruz (née Nelson), have two daughters. Cruz met his wife while working on the George W. Bush presidential campaign of 2000. Cruz’s wife is currently head of the Southwest Region in the Investment Management Division of Goldman, Sachs & Co. and previously worked in the White House forCondoleezza Rice and in New York as an investment banker.
When he was a child, Cruz’s mother told him that she would have to make an affirmative act to claim Canadian citizenship for him, so his family assumed that he did not hold Canadian citizenship. In August 2013, after the Dallas Morning News pointed out that Cruz had dual Canadian-American citizenship, he applied to formally renounce his Canadian citizenship and ceased being a citizen of Canada, on May 14, 2014.
- 2012 Republican primary
|Republican primary results, May 29, 2012
- 2012 Republican primary runoff
|Republican runoff results, July 31, 2012
- 2012 General Election
|General Election, November 6, 2012
||John Jay Myers
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WHAT IT MEANS IF FED NO LONGER SAYS IT’S ‘PATIENT’ ON RATES
For the Federal Reserve, patience may no longer be a virtue.
Surrounding the Fed’s policy meeting this week is the widespread expectation that it will no longer use the word “patient” to describe its stance on raising interest rates from record lows.
The big question is: What will that mean?
Many economists say the dropping of “patience” would signal that the Fed plans to start raising rates in June to reflect a steadily strengthening U.S. job market. Others foresee no rate hike before September. And a few predict no increase before year’s end at the earliest.
Complicating the decision is a surging U.S. dollar, which is keeping inflation far below the Fed’s target rate and posing a threat to U.S. corporate profits and possibly to the economy. A rate increase could send the dollar even higher.
In a statement it will issue when its meeting ends Wednesday and in a news conference Chair Janet Yellen will hold afterward, the Fed isn’t likely to telegraph its timetable. Yellen has said that any decision to raise rates will reflect the latest economic data and that the Fed must remain flexible.
Still, nervous investors have been selling stocks out of concern that a rate increase – which could slow borrowing and spending and weigh on the economy – is coming soon.
“I think the odds are better than 50-50 that the Fed … will drop the word `patient’ at the March meeting, and that would put an initial rate hike in play, perhaps as early as the June meeting,” said David Jones, author of several books about the Fed.
Historically, the Fed raises rates as the economy strengthens in order to control growth and prevent inflation from overheating. Over the past 12 months, U.S. employers have added a solid 200,000-plus jobs every month. And unemployment has reached a seven-year low of 5.5 percent, the top of the range the Fed has said is consistent with a healthy economy.
The trouble is that the Fed isn’t meeting its other major policy goal – achieving stable inflation, which it defines as annual price increases of around 2 percent. According to the Fed’s preferred inflation gauge, prices rose just 0.2 percent over the past 12 months. In part, excessively low U.S. inflation reflects sinking energy prices and the dollar’s rising value, which lowers the prices of goods imported to the United States.
It isn’t just inflation that remains below optimal levels. Though the job market has been strong, the overall economy has yet to regain full health. The economy slowed to a tepid 2.2 percent annual rate in the October-December quarter, and economists generally think the current quarter might be even weaker. Manufacturers are struggling with falling exports, partly because of the strong dollar, and consumers – the drivers of the economy – have seemed reluctant to spend their windfall savings from cheaper energy.
What’s more, pay for many workers remains stagnant, and there are 6.6 million part-timers who can’t find full-time jobs – nearly 50 percent more than in 2007, before the recession began.
For those reasons, some analysts think it would be premature to raise rates soon.
“The last thing the Fed wants to do right now is spook the markets and the economy into an even slower growth trajectory,” said Brian Bethune, an economics professor at Tufts University.
After it met in December, the Fed said for the first time that it would be “patient’ about raising rates. Yellen said that meant there would be no increase at the Fed’s next two meetings. And in testimony to Congress last month, she cautioned that even when “patient” is dropped, it won’t necessarily signal an imminent rate hike – only that the Fed will think the economy has improved enough for it to consider a rate increase on a “meeting-by-meeting basis.”
Some economists say the Fed may tweak its policy statement this week to signal that a higher inflation outlook would be needed before any rate hike. And they expect the Fed to go further in coming months to ready investors for the inevitable.
“The process is going to be glacial,” said Diane Swonk, chief economist at Mesirow Financial in Chicago. “They want to prepare the markets for change, but they don’t want to scare them.”
Though Swonk thinks the Fed will drop “patient” from its statement this week, she doesn’t expect a rate hike before September. Even then, she foresees only small increases in its benchmark rate.
Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University, suggested that the Fed’s strategy in beginning to raise rates won’t be to slow the economy. Rather, he thinks the goal will be to manage the expectations of investors, some of whom weren’t even in business in 2004, the last time the Fed began raising rates.
“The Fed is just trying to send a message that the world is about to enter a new age after a long period of low interest rates to a period of rising rates,” Sohn said.
The End of “Patient” and Questions for Yellen, by Tim Duy: FOMC meeting with week, with a subsequent press conference with Fed Chair Janet Yellen. Remember to clear your calendar for this Wednesday. It is widely expected that the Fed will drop the word “patient” from its statement. Too many FOMC participants want the opportunity to debate a rate hike in June, and thus “patient” needs to go. The Fed will not want this to imply that a rate hike is guaranteed at the June meeting, so look for language emphasizing the data-dependent nature of future policy. This will also be stressed in the press conference. Of interest too will be the Fed’s assessment of economic conditions since the last FOMC meeting. On net, the data has been lackluster – expect for the employment data, of course. The latter, however, is of the highest importance to the Fed. I anticipate that they will view the rest of the data as largely noise against the steadily improving pace of underlying activity as indicated by employment data. That said, I would expect some mention of recent softness in the opening paragraph of the statement. I don’t think the Fed will alter its general conviction that low readings on inflation are largely temporary. They may even cite improvement in market-based measures of inflation compensation to suggest they were right not to panic at the last FOMC meeting. I am also watching for how they describe the international environment. I would not expect explicit mention of the dollar, but maybe we will see a coded reference. Note that in her recent testimony, Yellen said:
But core PCE inflation has also slowed since last summer, in part reflecting declines in the prices of many imported items and perhaps also some pass-through of lower energy costs into core consumer prices.
Stronger dollar means lower prices of imported items. The press conference will be the highlight of the meeting. Presumably, Yellen will continue to build the case for a rate hike. Since the foundation of that case rests on the improvement in labor markets and the subsequent impact on inflationary pressures, it is reasonable to ask:
On a scale of zero to ten, with ten being most confident, how confident is the Committee that inflation will rise toward target on the basis on low – and expected lower – unemployment?
Considering that low wage growth suggests it is too early to abandon Yellen’s previous conviction that unemployment is not the best measure of labor market tightness, we should consider:
Is faster wage growth a precondition to raising interest rates?
I expect the answer would be “no, wages are a lagging indicator.” The Federal Reserve seems to believe that policy will still remain very accommodative even after the first rate hike. We should ask for a metric to quantify the level of accommodation:
What is the current equilibrium level of interest rates? Where do you see the equilibrium level of interest rates in one year?
A related question regards the interpretation of the yield curve:
Do you consider low interest long-term interest rates to be indicative of loose monetary conditions, or a signal that the Federal Reserve needs to temper its expectations of the likely path of interest rates as indicated in the “dot plot”?
Relatedly, differential monetary policy is supporting capital inflows, depressing US interest rates and strengthening the dollar. This dynamic ignited a debate of what it means for the economy and how the Fed should or should not respond. Thus:
The dollar is appreciating at the fastest rate in many years. Is the appreciating dollar a drag on the US economy, or is any negative impact offset by the positive demand impact of looser monetary policy abroad? How much will the dollar need to appreciate before it impacts the direction of monetary policy?
Given that the Fed seems determined to raise interest rates, we should probably be considering some form of the following as a standard question:
Consider the next six months. Which is greater – the risk of moving too quickly to normalize policy, or the risk of delay? Please explain, with specific reference to both risks.
Finally, a couple of communications questions. First, the Fed is signaling that they do not intend to raise rates on a preset, clearly communicated path like the last hike cycle. Hence, we should not expect “patient” to be replaced with “measured.” But it seems like the FOMC is too contentious to expect them to shift from no hike one meeting to 25bp the next, then back to none – or maybe 50bp. So, let’s ask Yellen to explain the plan:
There appears to be an effort on the part of the FOMC to convince financial markets that rate hikes, when they begin, will not be on a pre-set path. Given the need for consensus building on the FOMC, how can you credibly commit to renegotiate the direction of monetary policy at each FOMC meeting? How do you communicate the likely direction of monetary policy between meetings?
Finally, as we move closer to policy normalization, the Fed should be rethinking the “dot plot,” which was initially conceived to show the Fed was committed to a sustained period of low rates. Given that the dot-plot appears to be fairly hawkish relative to market expectations, it may not be an appropriate signal in a period of rising interest rates. Time for a change? But is the Fed considering a change, and when will we see it? This leads me to:
Cleveland Federal Reserve President Loretta Mester has suggested revising the Summary of Economic Projections to explicitly link the forecasts of individual participants with their “dots” in the interest rate projections. Do you agree that this would be helpful in describing participants’ reaction functions? When will this or any other revisions to the Summary of Economic Projections be considered?
Bottom Line: By dropping “patient” the Fed will be taking another step toward the first rate hike of this cycle. But how long do we need to wait until that first hike? That depends on the data, and we will be listening for signals as to how, or how not, the Fed is being impacted by recent data aside from the positive readings on the labor market. http://economistsview.typepad.com/economistsview/fed_watch/
Patient’ is History: The February employment report almost certainly means the Fed will no longer describe its policy intentions as “patient” at the conclusion of the March FOMC meeting. And it also keep a June rate hike in play. But for June to move from “in play” to “it’s going to happen,” I still feel the Fed needs a more on the inflation side. The key is the height of that inflation bar. The headline NFP gain was a better-than-expected 295k with 18k upward adjustment for January. The 12-month moving average continues to trend higher:
Unemployment fell to 5.5%, which is the top of the central range for the Fed’s estimate of NAIRU. Still, wage growth remains elusive:
Is wage growth sufficient to stay the Fed’s hand? I am not so sure. Irecently wrote:
My take is this: To get a reasonably sized consensus to support a rate hike, two conditions need to be met. One is sufficient progress toward full-employment with the expectation of further progress. I think that condition has already been met. The second condition is confidence that inflation will indeed trend toward target. That condition has not been met. To meet that condition requires at least one of the following sub-conditions: Rising core-inflation, rising market-based measures of inflation compensation, or accelerating wage growth. If any were to occur before June, I suspect it would be the accelerating wage growth.
I am less confident that we will see accelerating wage growth by June, although I should keep in mind we still have three more employment reports before that meeting. Note, however, low wage growth does not preclude a rate hike. The Fed hiked rates in 1994 in a weak wage growth environment:
And again in 2004 liftoff occurred on the (correct) forecast of accelerating wage growth:
So wage growth might not be there in June to support a rate hike. And, as I noted earlier this weaker, I have my doubts on whether core-inflation would support a rate hike either. That leaves us with market-based measures of inflation compensation. And at this point, that just might be the key:
If bond markets continue to reverse the oil-driven inflation compensation decline, the Fed may see a way clear to hiking rates in June. But the pace and timing of subsequent rate hikes would still be data dependent. I would anticipate a fairly slow, halting path of rate hikes in the absence of faster wage growth. Bottom Line: “Patient” is out. Tough to justify with unemployment at the top of the Fed’s central estimates of NAIRU. Pressure to begin hiking rates will intensify as unemployment heads lower. The inflation bar will fall, and Fed officials will increasingly look for reasons to hike rates rather than reasons to delay. They may not want to admit it, but I suspect one of those reasons will be fear of financial instability in the absence of tighter policy. June is in play.
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