Tuesday, December 30, 2008
From the WSJ:
Sen. Reid, perhaps the most-vulnerable Democrat who will face re-election in a midterm race that is likely to favor his party once again, began interviewing campaign managers last week. The Senate majority leader also recently stepped up fund-raising.
A recent Research 2000 poll of likely voters put his approval rating at 38% and his disapproval rating at 54%, a possible reflection of voters' displeasure with gridlock and partisanship in Washington. And while Nevada broke for President-elect Barack Obama by 12 percentage points in November, the state voted for President George W. Bush in 2000 and 2004.
By taking out Reid, they will loose a crucial player in executing Obama's grand illusion.
Saturday, December 20, 2008
CHICAGO – Gov. Rod Blagojevich is legendary in Illinois political circles for not picking up the phone or returning calls, even from important figures like the state's senior senator, Dick Durbin.
But there was always one call Blagojevich regularly took, say his aides, and that was from Rahm Emanuel — his congressman, his one-time campaign adviser and, more recently — and troubling for Emanuel — one of his contacts with President-elect Barack Obama's transition staff.
The friendly rapport Blagojevich and Emanuel shared over the years has suddenly become a troubling liability for Emanuel and the new president he will serve as chief of staff.
Emanuel and Obama have remained silent about what, if anything, Emanuel knew of the governor's alleged efforts to peddle Obama's vacant Senate seat to the highest bidder.Emanuel did contact the governor's office about the appointment and left Blagojevich with the impression that he was pushing Valerie Jarrett, a close Obama friend, so he wouldn't have to compete with her in the White House for Obama's attention, said a person close to Blagojevich.
Friday, December 19, 2008
According to Greg Mankiw.
Suppose, for example, that tax cuts are not lump-sum but instead take the form of cuts in payroll taxes (as suggested by Bils and Klenow). This tax cut would reduce the cost of labor and, if labor and capital are complements, increase the demand for capital goods. Thus, the tax cut stimulates demand not only by increasing disposable income and consumption spending (the textbook Keynesian channel) but also by incentivizing more investment spending. A similar result might obtain if the tax cut included, say, an investment tax credit.
Thursday, December 18, 2008
We have had the largest destruction of wealth, the most serious down turn in the economy since the great depression, the most home foreclosures, the collapse of the investment banking industry, etc, etc, etc and they chose Obama?
The most noteworthy feature of these data is the substantial growth of government from 1929 to 1945. It is easy to understand why the size of government grew so much during this period: The nation was responding to the crises of the Great Depression and, especially, World War II. But what is noteworthy is that while these crises were transitory, the increase in the scope of government was permanent.
This historical episode is one reason why advocates of limited government are rightly worried about the fiscal stimulus package that the incoming administration is going to propose. Rahm Emanuel, the new White House chief of staff, is reported to have said, "You don't ever want to let a crisis go to waste: It's an opportunity to do important things that you would otherwise avoid." It is not entirely clear what he meant by this. But one interpretation is that he wants to use a temporary crisis as an pretense to engineer a permanent increase in the size of government.
Monday, December 15, 2008
The nation’s flawed-but-free Medicaid program discourages most Americans from buying long-term health insurance that could provide better care and spare their life savings, a new study co-written by a University of Illinois professor says.
professor Jeffrey R. Brown says the study is the first to demonstrate how Medicaid stifles demand for private policies by creating financial disincentives that steer people toward the no-cost safety net, which covers nursing-home and other long-term care costs once their finances are exhausted.
“By modeling the lifetime financial implications of the insurance decision, we discovered that it is rational for most people to not buy private policies, even though Medicaid is actually pretty lousy insurance because it forces you to impoverish yourself first,” he said.
A core problem is that private policies require paying for much of the same coverage that comes free under Medicaid once nest eggs dip, said Brown, recently nominated by President Bush to serve on the board of trustees for the nation’s Medicare and Social Security programs.
So while private insurance offers broader coverage and protects personal assets, the net benefits amount to just 20 to 40 cents on every dollar of premiums after taking into account what Medicaid would have covered at no charge, according to the study, which will appear in The American Economic Review.
“You have this low quality public insurance program crowding out potentially better private insurance policies. And yet because the bad one is free to the consumer, it is still in the consumer’s best interest to take the free bad one rather than buy the expensive good one,” Brown said.
As a result, Medicaid – intended as a payer of last resort for the poor – now covers a third of long-term care expenses in the U.S., a problem Brown says will only worsen with medical expenses rising and nearly 80 million baby boomers nearing their retirement years.
Obama may have good intentions like his liberal predecessors, but the private markets are better at allocating scarce resources than arrogant bureaucrats, like Obama.
Saturday, December 13, 2008
By providing funding from the TARP he sets a dangerous precedent and give his successor some ammo to bail out other industries.
The problem is that if he bails out the auto industry there are going to be other industries from retail, airlines, insurance and on and on that is going to look for handouts.
Obama will use this precedent to enrich his favorite industries, especially with those with high union membership.
Just say no and let the auto makers go into a pre-packaged bankruptcy. Let them emerge as more leaner and more competitive entities. Chapter 11 bankruptcy was designed to allow entities and individuals to get a fresh start and that is what the auto makers need now.
Let them do this before the Obama admin comes in and nationalizes the automakers by taking equity stakes in them. Why would a car czar know more than the auto makers? It is idotic to think that micro managing these entities will get them out of their current mess. They need to do with the help of the bankruptcy court not the government.
Friday, December 12, 2008
Simple game theory analysis shows that he and the Democrats are making a non credible threat.
The Democrats have everything to loose and the country is on the Republican's side. Knowing this the Republicans can defeat the bill and expect the Democrats to come back with another bill on the Republican's terms.
The Republicans in the Senate have stuck to their principles and I believe have indicated how they will deal with the new administration and their agenda.
The Democrats in the Senate are politically impotent while the Republicans have new found vigor.
Wednesday, December 10, 2008
Chu shared the 1997 Nobel Prize in physics and is a former chairman of the physics department at Stanford University in California and head of the electronics research laboratory at Bell Labs.
The Lawrence Berkeley website said Chu was an early advocate for finding scientific solutions to climate change and had guided the laboratory on a new mission to become the world leader in alternative and renewable energy research, particularly the development of carbon-neutral sources of energy.
This isn't a big government approach. Lawerence Livermore is an innovation engine for US government and it will allow us to develop technologies useful for the government and eventually disperse the technology to the commercial arena.
These two (and probably Obama) have close ties to the corrupt practices of Blagojevich.
'The matter also highlights ties between the disgraced Democratic governor and some members of Mr. Obama's inner circle. His top campaign strategist, David Axelrod -- who will move to the White House for a senior adviser's job -- lists Mr. Blagojevich on his firm's Web site as one of his clients, when the politician was a candidate for Congress.
he Republican National Committee, however, circulated some of Mr. Obama's statements to the press on Tuesday, including a 2006 report indicating Mr. Obama said he would be happy to work for Mr. Blagojevich's 2006 re-election campaign, even though the Illinois governor was under investigation. "If the governor asks me to work on his behalf, I'll be happy to do it," a suburban Chicago newspaper quoted Mr. Obama as saying.
How can we be sure that Axelrod and Emmanuel won't bring their dirty ties to the White House and sully the new administration?
“The democratic process is often messy,” Axelrod wrote in the op-ed. “Diverse constituencies fight fiercely for their priorities. Their elected representatives use the influence they have to meet those needs, including sometimes the exchange of favors – consideration for jobs being just one.
Barack Obama’s message man David Axelrod once staked out a much more nuanced position on Fitzgerald’s anti-corruption crusade.
In a 2005 op-ed, Axelrod argued, in effect, that trading political favors – including jobs – is part of the grease that makes government work.
He ripped Fitzgerald at the time for trying “to use the criminal code to enforce (his) vision” of “entirely remov(ing) politics from government.”
Sunday, December 07, 2008
Porter wrote that the U.S. economy has historically benefited from several great assets: an unparalleled environment for entrepreneurialism, a tremendous infrastructure for scientific research, the world’s best universities, a strong commitment to competition and free markets, decentralized regional economies, and efficient capital markets.
But, Porter continued, these advantages are starting to erode. The U.S. has an inadequate rate of reinvestment in science and technology. America’s confidence in free markets is waning. Lack of regulatory oversight has undermined capital markets. Universities have not sufficiently increased graduation rates. American workers do not have a credible safety net. Regulations and litigation have inflated the cost of business. Most important, there is no long-term economic strategy to organize responses to these problems.
Porter’s basic message was that President-elect Barack Obama should do nothing in the short term that doesn’t serve a long-term goal.
Saturday, December 06, 2008
From Greg Mankiw:
What would you call a group of economists who are skeptical of regulating mortgage markets, who think unemployment insurance and unions increase unemployment, who say that tax hikes retard economic growth, and who believe that the recovery from the Great Depression was a monetary phenomenon rather than the result of New Deal fiscal policy?
No, it is not a right-wing cabal. It's Team Obama.
Friday, December 05, 2008
From Greg Mankiw:
First, since most infrastructure is used locally, the proper level of spending is best determined by state and local governments rather than by the federal government. Earlier, I suggested that fiscal stimulus could be decentralized. Each state governor could be allowed to determine whether to take federal money as state aid or have it paid directly to his or her state's citizens as tax relief. I still think that makes sense.
Second, more public projects would pass a cost-benefit test if we repealed the Davis-Bacon Act. This law requires contractors on these public projects to pay "prevailing wages," which are typically union wages well in excess of what would occur in a free market. If the government paid market-determined wages for infrastructure projects, we could have both more infrastructure and less government debt. Without doubt, that legacy would benefit future generations.
Thursday, December 04, 2008
By challenging government intervention and deficit spending they can prove to the electorate that they are the party of economic progress that is sustainable and will revive America's competitive stature in the world economy.
Sen Shelby had done a great job questioning the CEOs of the big three as to why the government should offer them a bridge loan.
Monday, November 24, 2008
The Washington Post reports:
Facing an increasingly ominous economic outlook, President-elect Barack Obama and other Democrats are rapidly ratcheting up plans for a massive fiscal stimulus program that could total as much as $700 billion over the next two years....Obama has set a goal of creating or preserving 2.5 million jobs by 2011.Dividing one number by the other, that works out to $280,000 per job.
What is going on here? Logically, it must be one of three possibilities:
1. The fiscal stimulus is going to be much smaller than is being reported.
2. The new administration is setting a low bar for itself when it comes to job creation.
3. The Obama team believes in very small fiscal policy multipliers.
Let me amplify the last point with a rough back-of-the-envelope calculation. The average weekly earnings of production and nonsupervisory workers is about $600, or about $60,000 over a two-year period. Granted, labor income is only about two-thirds of national income, and we have to add a few supervisors into the mix. So let's say each job created means $100,000 of extra national income. If we are generating $100,000 of income with $280,000 of government spending, the multiplier is only 100/280, or 0.36. By contrast, traditional Keynesian models suggest a multiplier closer to 2.0.
Thursday, November 20, 2008
Let the business cycle takes its natural course. It will help the climate change efforts by allowing the Kyoto Protocol signatories to comply with the emission reduction levels.
Also the government does not have to spend additional dollars or enact new regulation to reduce emissions in this country.
But of course Obama is smarter than us and government is the answer.
Clearly Sen Feingold has a double standard.
From the WSJ:
As they usually do when Democrats run through the loopholes, campaign reformers were uncharacteristically quiet while Mr. Obama raked in the dough. But with the election over, they've suddenly got their mojo back. Within days of November 4, seven "reform" outfits were demanding more disclosure requirements for bundlers and raising the amount of taxpayer funding that would have been available to Mr. Obama if, ahem, he hadn't chosen not to accept taxpayer funds.
Like writers at the Nation magazine who claim that socialism hasn't failed because it hasn't really been tried, the thinkers who gave us the post-Watergate campaign reforms and then McCain-Feingold continue to insist that "The way Washington works is not going to change until we fundamentally change the nation's campaign finance laws."
Wednesday, November 19, 2008
While at CNAS, Flournoy helped to write a report that called for reducing the open-ended American military commitment in Iraq and replacing it with a policy of “conditional engagement” there. Significantly, the paper rejected the idea of withdrawing troops according to the sort of a fixed timeline that Obama espoused during the presidential campaign. Obama has in recent weeks signaled that he was willing to shelve the idea, bringing him more in line with Flournoy’s thinking.
Tuesday, November 18, 2008
Lawerence Summers and Timothy Geithner Will Face Tough Confirmation Hearings for Sec of The Treasury
Mr Geithner was intensly and intimately involved with the current bailout process. It is clear that the bailout has not worked out as originally intended and cetain risks remain. The Republicans in the Senate should especially eschew Mr. Geithner's internventionalist bent.
Accoring to the WSJ:
Mr. Geithner is known as one of the most aggressive interventionists within the current group of crisis managers, at times preferring a more forceful government response than some government officials. In the case of Lehman, Mr. Geithner didn't want to rule out a government-financed intervention in the days leading up to the firm's demise, but Treasury officials told Wall Street executives that support was off the table.
President-elect Barack Obama continued to fill out staff positions for his incoming administration during the weekend, with many of the new appointees having Clinton White House pedigrees.
Monday, November 17, 2008
Labor unions at the Federal Aviation Administration are looking to President-elect Barack Obama for quick action to settle long-running contract conflicts at the agency.
The agency's two largest labor unions, the National Air Traffic Controllers Association and the Professional Aviation Safety Specialists, which represents technicians and safety inspectors, say their top priority is resolving the disputes.
"We want a contract," said Patrick Forrey, the controllers' union president. "We've gone two years without a contract."
Labor leaders say the unions will offer the new administration a "to-do list" involving presidential executive orders on assorted labor policy questions. One would reinstate a Clinton-era policy that required managers at federal agencies to work cooperatively with labor unions. The need, the leaders say, arises partly from labor's struggles with the Bush administration at agencies like the FAA. They spoke on condition of anonymity because discussions have not yet taken place.
Last time the Democrats controlled the Senate, Congress and the White House was during the first two years of Bill Clinton. If history rhymes then in two years the Democrats are going to have diminishing numbers in Congress to counterbalance Obama's neo-socialist policies.
Obama therefore will doing everything he has to keep his promises so that the Democrats can run on somehting besides, 'Obama needs our help' theme.
That would be great for the Republicans because it will allow them to construct a coheisve theme to dump the Democrats and regain their majority.
Thursday, November 13, 2008
So it not going to be politics as usual. Not. From the AP
Biden has said he told Obama, before accepting the running mate slot, that he wouldn't want a peripheral assignment like reorganizing government, which Gore took on, along with other tasks. In a New Yorker interview last month, he said he told Obama: "I don't want to be a vice president who is not part of the major decisions you make."
Biden himself will have an experienced aide who can help his voice be heard in the White House. He chose former Gore chief of staff Ron Klain to fill the same job for him, Democrats said Thursday.
It will differentiate them clearly from the Democrats and sets them up to win more seats in the Senate and the House in 2010.
Wednesday, November 12, 2008
While campaigning, he frequently decried the polarizing politics of years past.
"I am in this race because I don't want to see us spend the next year re-fighting the Washington battles of the 1990s," he said in a typical speech in South Carolina a year ago. "I don't want this election to be about the past, because if it's about the future, we all win."
But his government-in-waiting is rife with officials from the Clinton administration. Podesta was a senior Clinton White House aide, as was Obama's choice for chief of staff, Rep. Rahm Emanuel (D-Ill.).
Warren Christopher, who served as President Clinton's first secretary of State and is a partner at the law firm of O'Melveny & Myers in Los Angeles, is heading up the transition for the State Department, and former Sen. Sam Nunn (D-Ga.) is preparing things at the Pentagon.
It's starting to look as though Sen. Hillary Rodham Clinton's family empire is living on, even though she lost the Democratic primary.
The high visibility of old hands and familiar faces underscores a tension that is already running through Team Obama: The president-elect has promised to overthrow Washington's habits of partisanship and cronyism.
Tuesday, November 11, 2008
We are, I know, ready and willing to submit our lives and our property to such discipline, because it makes possible a leadership which aims at the larger good. This, I propose to offer, pledging that the larger purposes will bind upon us, bind upon us all as a sacred obligation with a unity of duty hitherto evoked only in times of armed strife.
But, in the event that the Congress shall fail to take one of these two courses, in the event that the national emergency is still critical, I shall not evade the clear course of duty that will then confront me. I shall ask the Congress for the one remaining instrument to meet the crisis -- broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.
For the trust reposed in me, I will return the courage and the devotion that befit the time. I can do no less.
We do not distrust the -- the future of essential democracy. The people of the United States have not failed. In their need they have registered a mandate that they want direct, vigorous action. They have asked for discipline and direction under leadership. They have made me the present instrument of their wishes. In the spirit of the gift I take it.
From FDR's Inaugural address
Restoration calls, however, not for changes in ethics alone. This Nation is asking for action, and action now.
Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a war, but at the same time, through this employment, accomplishing great -- greatly needed projects to stimulate and reorganize the use of our great natural resources.
Hand in hand with that we must frankly recognize the overbalance of population in our industrial centers and, by engaging on a national scale in a redistribution, endeavor to provide a better use of the land for those best fitted for the land.
Yes, the task can be helped by definite efforts to raise the values of agricultural products, and with this the power to purchase the output of our cities. It can be helped by preventing realistically the tragedy of the growing loss through foreclosure of our small homes and our farms. It can be helped by insistence that the Federal, the State, and the local governments act forthwith on the demand that their cost be drastically reduced. It can be helped by the unifying of relief activities which today are often scattered, uneconomical, unequal. It can be helped by national planning for and supervision of all forms of transportation and of communications and other utilities that have a definitely public character. There are many ways in which it can be helped, but it can never be helped by merely talking about it.
Monday, November 10, 2008
This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure, as it has endured, will revive and will prosper.
Values have shrunk to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; and the savings of many years in thousands of families are gone. More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.
Sunday, November 09, 2008
Chicago Business school professors Atif Mian, Amir Sufi, and Francesco Trebbi have already run the numbers on politicians' voting records for both bailout packages, and their findings won't ease concerns about misspent billions. They find that congressmen from foreclosure-ridden districts were far more likely to vote for the mortgage bailout, and lawmakers who received big checks from the financial-services lobby were likely to cast votes in favor of the bank recapitalization plan. Given that the politics of the bailouts has already proved to be focused narrowly on local interests and strongly influenced by special interests, there's good reason to worry about what will happen when taxpayer dollars actually start getting spent.
Saturday, November 08, 2008
'If the election of our first African-American president didn’t stir you, if it didn’t leave you teary-eyed and proud of your country, there’s something wrong with you.'
Only bleeding heart liberals like Krugman would tear up in response to an event like this. I would like to save my tears for more worthy events.
I am proud of my country and those fellow citizens who do not support Obama's policies. This country was built and thrived on diversity. We don't need elitists like Krugman to tell the citizenry how to react to an election event.
Let's wait a bit before we give Obama any sort of credit.
Monday, November 03, 2008
As Senator Barack Obama spends the last of hundreds of millions of dollars donated to his presidential campaign, the debate over how future campaigns will be financed is set to begin in earnest.
Democrats, in particular, who have traditionally supported limits on campaign spending, are grappling with whether they can embrace Mr. Obama’s example without being seen as hypocritical.
“I think there is going to be tremendous reluctance on our side to yield any of that advantage,” said Tad Devine, a senior strategist for Senator John Kerry’s presidential campaign in 2004.
Both candidates have campaigned as reformers and declared that repairing the public financing system for presidential campaigns would be a priority in their administration. But Mr. Obama, the Democratic nominee for president, apparently did not absorb much by way of political cost when he broke a pledge to accept public financing if his opponent did as well.
A recent USA Today-Gallup poll found most Americans did not even know who was taking public financing and who was not; only Mr. McCain opted for the $84 million in public financing. But the survey also found most of those polled supported limits on campaign spending
Saturday, November 01, 2008
"We don't need bigger government or smaller government. We need a better government — a more competent government, a government that upholds the values we hold in common as Americans."
It's pretty clear that, under Obama, the size of government will grow. It will regulate more. It will spend more on health care, energy, education and infrastructure. And it will tax more. The question is: How much? Is Europe his idea of the good economy?
Speaker Nancy Pelosi, D-Calif., has shown little inclination to be restrained in her liberalism either by Republicans or conservative Blue Dog Democrats.
And, if Senate Majority Leader Harry Reid, D-Nev., can muster 60 votes to thwart GOP filibusters, it's President Obama who'll have to insist on inviting GOP input into governing decisions.
Friday, October 31, 2008
Obama's federalized medical insurance system starts the transition away from private medical care and toward Obama's endlessly promised "universal health care." This has always been the sine qua non of planting a true, managed-market economy in the U.S.
Obama's refundable tax credits are direct cash transfers from the federal government. This would place some 48% of Americans, nearly half, out of the income tax system. More than a tax proposal, this is a deep philosophical shift, an American version of being "on the dole."
His stated intent to renegotiate free-trade agreements such as Nafta is a philosophical shift. It abandons the tradition of a hyper-competitive America dating back to the Industrial Revolution, toward a protected, domestic workforce, as in Western Europe. The Democratic proposal to eliminate private union votes -- "card check" -- ensures the spread of a static, Euro-style workforce.
Eliminating the ceiling on payroll taxes changes Social Security from an insurance to a welfare program. Obama's tax credits requires performing government-identified activities, the essence of a "directed economy."
All this would transform the animating American idea -- away from creation and toward protection.
The Barack Obama for president campaign has kicked off three newspaper reporters its campaign plane.
The goal of Sen. Obama and the modern, "progressive" Democratic Party is to move the U.S. in the direction of Western Europe, the so-called German model and its "social market economy." Under this notion, business is highly regulated, as it would be in the next Congress under Democratic House committee chairmen Markey, Frank and Waxman. Business is allowed to create "wealth" so long as its utility is not primarily to create new jobs or economic growth but to support a deep welfare system.
The political planets are aligned to make this achievable. In the aftermath of the financial crisis, prominent Democrats, European leaders in France and Germany and more U.S. newspaper articles than one can count have said that the crisis proves the need to permanently tame the American "free-market" model. P.O.W. Alan Greenspan is broadcasting confessions. The question is: Are the American people of a mind to throw in the towel on the system that got them here?
This would be a historic shift, one post-Vietnam Democrats have been trying to achieve since their failed fight with Ronald Reagan's "Cowboy Capitalism."
Of course Cowboy Capitalism built the country. More than any previous nation in history, the United States made its way forward on a 200-year wave of upwardly mobile, profit-seeking merchants, tradesmen, craftsmen and workers. They blew out of New England and New York, rolled across the wildernesses of the Central States, pushed across a tough Western frontier and banged into San Francisco and Los Angeles, leaving in their path city after city of vast wealth.
The U.S. emerged a superpower, and the tool of that ascent was simple -- the pursuit of economic growth. Now China, India and Brazil, embracing high-growth Cowboy Capitalism, are doing what we did, only their cities are bigger.
Thursday, October 30, 2008
Most economists agree on these two propositions about tax incidence (covered in Chapter 6 of my favorite textbook):
- It does not matter which side of a market you tax. A tax on buyers is the same as a tax on sellers. In particular, a tax on employers is equivalent to a tax on employees.
- Because labor demand tends to be more elastic than labor supply, a payroll tax falls largely on employees.
Now consider the Obama health plan. A major element of the plan is an extra payroll tax on firms that do not give their workers health insurance. By the basic theory of tax incidence, this is equivalent to a tax on workers without insurance.
In other words, the Obama plan is much the same as imposing a health insurance mandate, backed up by the penalty of a tax surcharge on your earnings if you fail to have coverage.
"The choice you'll have," Mr. Obama warned of the McCain plan during one of the debates, "is having your employer no longer provide you health care." Sounds terrible. But wait, let's consult another one of Mr. Obama's advisers. David Cutler, the Otto Eckstein Professor of Applied Economics at Harvard, put it this way: "Health insurance is not something that is made better by tying it to employment. As a result, essentially all economists believe that universal coverage should be done outside of employment."
That passage comes from Mr. Cutler's 2004 book, "Your Money or Your Life," which outlined a strategy for universal health care. Not surprisingly, Professor Cutler's plan, like Mr. McCain's, also applied subsidies such as "tax credits -- people get a lower tax bill, or a refund from the government, to be used to purchase insurance." In this he was echoing many other liberal health experts such as MIT's Jonathan Gruber, another Democratic policy star.
These advisers know that Mr. Obama's claim that Mr. McCain will tax health benefits "for the first time in history" is particularly disingenuous. For people who stick with employer coverage under the McCain plan, the money employers take out of wages to pay for insurance would be taxed, but the new credit more than covers the bill. The people who decide to buy coverage on their own would see their wages rise. And everyone who joins the individual market -- many of them uninsured now -- would be equipped with new health dollars, instead of paying with after-tax income.
Wednesday, October 29, 2008
Obama's neo-socialist policies can lead to similar consequences for the current economic malaise.
Unemployment, which had been 3 percent in 1929, rose to 25 percent in 1933. Even during the worst recession since then, in 1982, the United States economy did not experience half that level of unemployment.Policy makers in the 1930s responded vigorously as the situation deteriorated. But like a doctor facing a patient with a new disease and strange symptoms, they often acted in ways that, with the benefit of hindsight, appeared counterproductive.
Less successful were various market interventions. According to a study by the economists Harold L. Cole and Lee E. Ohanian, both of the University of California, Los Angeles, and the Federal Reserve Bank of Minneapolis, President Roosevelt made things worse when he encouraged the formation of cartels through the National Industrial Recovery Act of 1933. Similarly, they argue, the National Labor Relations Act of 1935 strengthened organized labor but weakened the recovery by impeding market forces.
Tuesday, October 28, 2008
Let t1 be the combined income and payroll tax rate, t2 be the corporate tax rate, t3 be the dividend and capital gains tax rate, and t4 be the estate tax rate. And let r be the before-tax rate of return on corporate capital. Then one dollar I earn today will yield my kids:
If there were no taxes, so t1=t2=t3=t4=0, then $1 earned today would yield my kids $28. That is simply the miracle of compounding.
Under the McCain plan, t1=.35, t2=.25, t3=.15, and t4=.15. In this case, a dollar earned today yields my kids $4.81. That is, even under the low-tax McCain plan, my incentive to work is cut by 83 percent compared to the situation without taxes.
Under the Obama plan, t1=.43, t2=.35, t3=.2, and t4=.45. In this case, a dollar earned today yields my kids $1.85. That is, Obama's proposed tax hikes reduce my incentive to work by 62 percent compared to the McCain plan and by 93 percent compared to the no-tax scenario. In a sense, putting the various pieces of the tax system together, I would be facing a marginal tax rate of 93 percent.
The bottom line: If you are one of those people out there trying to induce me to do some work for you, there is a good chance I will turn you down. And the likelihood will go up after President Obama puts his tax plan in place. I expect to spend more time playing with my kids. They will be poorer when they grow up, but perhaps they will have a few more happy memories.
Monday, October 27, 2008
What is striking about this picture -- and contradicts Mr. Obama's public comments -- is that the McCain tax credit for the purchase of health insurance exceeds the value of the current exclusion for all income levels shown. Indeed, it generally provides more resources to purchase health insurance than the existing exclusion. The total subsidy for health care would rise from about $3.6 trillion over 10 years today to roughly $5 trillion under his proposal.
How large an effect does this proposal have on the number of uninsured? Based on estimates by career economists in the Treasury Department's Office of Tax Analysis of similar proposals discussed in the Washington Beltway several years ago, the McCain health-care tax credit can be expected to increase the number of insured by 15 million and probably more. The Lewin Group, a respected private health-care research outfit, recently estimated that the McCain credit would increase the number of insured by as much as 21 million. It is true that many may no longer get their insurance through their employer, but they will be given the resources to purchase insurance on their own.
Will the insurance that is purchased be a generous plan with first dollar coverage or low deductibles? It is much more likely to be a plan with higher deductibles that is more focused on providing true insurance against catastrophic losses rather than a more generous plan that includes a lot of prepayment for routine and predictable medical expenses. But this is precisely one of the objectives of the policy: to reduce the current tax bias that encourages people to funnel routine health expenses through insurance policies.
Saturday, October 25, 2008
According to Bloomberg:
Chairman Barney Frank said there should be a freeze on Wall Street bonuses until companies find a way to keep the year-end payouts from encouraging excessive risk-taking.
``There should be a moratorium on bonuses,'' Frank, a Massachusetts Democrat, told reporters yesterday in Washington. ``They have a negative incentive effect because they are the ones that say if you take a risk and it pays off you get a big bonus,'' and if it causes losses ``you don't lose anything.''
This shows how politicians are ignorant of the facts and fail to understand the root causes of the current crisis. Did bonuses really cause the excessive risk taking?
If this is an example of the big government approch of an Obama admin then the US economy is in trouble
Friday, October 24, 2008
Capitalism has been history's greatest force for wealth creation, economic opportunity and improvement in the human condition. It doesn't come with guarantees against busts as well as booms, although better policy can limit the swings. For those who think the current financial crisis is primarily due to our limited government, consider that mixed economies with a bigger government presence, such as the U.K. and France, have their own burst housing bubbles and recessions. The Japanese government's micromanagement of its financial system didn't prevent a financial crisis at the end of its real-estate bubble.
We still have a tremendously productive labor force, great technology, and lots of tangible capital. The economy will return to health, to paraphrase the Founding Fathers, if we can keep our economic system largely intact. That's the vision, judgment and backbone we need in the next president as he navigates these difficult times.
For example, the Obama tax plan calls for large tax increases, including raising rates on dividends and capital gains to 20% from 15%. This will make it harder for financial firms to raise private capital, and force greater reliance on public capital. Worse, his refundable tax credits will raise the share of those making no contribution to the funding of general government to 48% from 38%, hastening, perhaps cementing, the unhealthy budgetary dynamic of a majority of voters receiving more in public payments than they pay in taxes.
While Mr. McCain proposes serious spending control, achieving it would not be easy. Mr. Obama says he'll go through the budget line by line, yet proposes large increases in social spending, paid for by an assumed Iraq peace dividend. President Clinton decreased military spending rapidly (38% as a percentage of GDP), leaving major holes in our military. It's still a dangerous world; we should not repeat that mistake. Mr. Obama's Social Security proposal is to turn to taxes first and rule out even a small increase in retirement age, no matter how much life expectancy increases.
Saying he is not a protectionist is not enough; nor is saying he is cutting taxes by counting spending increases as tax cuts. He could help financial markets and the economy by pledging to delay any tax hikes until the economy is healthy and to veto any additional ones from Congress.
Thursday, October 23, 2008
The current situation was created by a perfect storm of mutually reinforcing trends and policy mistakes: loose monetary policy (years of negative real interest rates in a growing economy); socially engineered housing policy (the Community Reinvestment Act, Fannie Mae and Freddie Mac, HUD's no-money-down mortgages); the rapid growth of leverage, opaque and technically deficient derivatives, and the shadow banking system; fragmented regulation, lax diligence, poor governance, fraud; and an oil price shock. The result: a housing bubble bursting into recession.
Unfortunately, the same political forces that socially engineered a disastrous mortgage market now have other industries in their sights: pharmaceuticals, health care, energy. Barack Obama enthusiastically endorses such policies; John McCain less so. The big risks are higher taxes, protectionism, regulatory micromanagement, vast new spending, subsidies and mandates. Recall that the stock market crash of 1929, and the ensuing recession, were turned into the Great Depression by tax increases and protectionism (and bad monetary policy).
On Tuesday Senator Obama said this spending would create millions of new jobs by closing a federal "investment deficit." Over the past eight years the federal budget has exploded by more than $1.1 trillion, much of it for the very programs that Democrats want to spend more on. Let's start with infrastructure. Three years ago Congress passed a transportation bill of more than $286 billion. The transportation budget is up 22% after inflation in the past eight years. Roads and bridges can help economic growth if they increase productivity by more than the amount they cost in higher taxes or borrowing. But not if they are bridges to nowhere as so many of these projects are.
How about aid to local communities? That spending has soared by 91% after inflation in eight years. The education budget is up 57%. Welfare programs are up 30%. Only two years ago Democrats were calling the Tom DeLay Republicans spendthrift. Now they say there's an "Federal budget deficits are not something we obsess about, but eventually this new spending has to be paid for, and Barney Frank's comments only underscore that big tax increases are coming.
The prospect of these tax increases is now hanging over the economy like a pall, as investors and businesses wonder where and how heavily an Obama Administration and Congress would strike. The pall is likely to continue well into 2009, as millions of Americans delay their investment decisions until they know how much their after-tax returns are likely to fall.investment deficit."
Tuesday, October 21, 2008
Unlike FDR, Mr. Obama will not have to create the mechanisms government uses to interfere with the economy before imposing his policies. FDR had to get the Supreme Court to overturn a century's worth of precedents limiting the power of government before he could use the Constitution's commerce clause, among other things, to increase government control of the economy. Mr. Obama will have no such problem.
FDR also had to create agencies to implement regulations. Today, the Securities and Exchange Commission and the National Labor Relations Board (both created in the 1930s) as well as the Environmental Protection Agency and others created later are in place. Increasing their power will be easier than creating them from scratch.
Even before the current crisis, there was a great demand for increased government regulation to limit global warming. That gives the next president a ready-made box in which to place more regulation, and a legion of supports eager for it.
But if the coming wave of new regulation from an Obama administration is harmful to the economy, Mr. Obama will take a page from FDR's playbook. He'll blame Republicans for having caused the market crash in the first place, and so escape blame for the consequences of his policies. It worked for FDR and, so far in this campaign, blaming Republicans and George W. Bush has worked for Mr. Obama.
Sunday, October 19, 2008
Pfizer recently said it's exiting the development of drugs for common conditions like heart disease. This is part of a shift underway in the pharmaceutical industry to give up on routine medical problems in favor of discovering "specialty" drugs for rare diseases and unmet medical needs like cancer.
The shift is driven in part by the industry's critics in Washington, who have long maligned drug companies for targeting too many routine medical problems with drugs that were "merely" tweaks on existing medicines. Now these same detractors, led by House Democrats, are proposing controls on access to and eventually pricing of the specialty drugs as well. Under a Barack Obama presidency, this is one way they'll pay for the candidate's plan to create a Medicare-like program for the under-65 crowd. These new controls -- based on a view of medical care as a commodity to be purchased at the lowest price, with little allowance for innovation -- could push drug development over a tipping point.
Mr. Obama's policies on drug access and his party's plans to control pricing will distort the financial incentives that inspire innovations. This will shortchange the contributions innovations provide.
If the current polls hold, Barack Obama will win the White House on November 4 and Democrats will consolidate their Congressional majorities, probably with a filibuster-proof Senate or very close to it. Without the ability to filibuster, the Senate would become like the House, able to pass whatever the majority wants.
Though we doubt most Americans realize it, this would be one of the most profound political and ideological shifts in U.S. history. Liberals would dominate the entire government in a way they haven't since 1965, or 1933. In other words, the election would mark the restoration of the activist government that fell out of public favor in the 1970s. If the U.S. really is entering a period of unchecked left-wing ascendancy, Americans at least ought to understand what they will be getting, especially with the media cheering it all on.
Saturday, October 18, 2008
In the fourth year of a presidential cycle, where you have a lame-duck president, the typical pattern of S&P 500 performance has been something like 10% below the normal long-term average (a 5.2% gain, inflation-adjusted), and worse if it is an overpriced market. A first year is never very pleasant: They average about 3% below normal. If they are overpriced, they do four points worse than that.
But if the party in power changes, first years tend to be eight points below normal. The following year is ugly, too. The average year two, since 1932, has been 10 points below normal and, if the market is overpriced, 15 points below normal. This is unpleasant. By a nice coincidence, those averages suggest the market will decline to 1100 in 2010, which is exactly the number we get to from a completely different technique—building it from the grass roots through fundamental value. We do that by taking average corporate-profit margins, actually a generous average, assigning a normal market price/earnings ratio, and that gives you 1100 in 2010. This year, next year and the year after will all be uncomfortable years. One of them might be up, but my guess is it won't be up by much.
There is a also a school of thought that government meddling in the natural cycle of the economy has precipitated this current economic malaise beginning with the dot com bubble.
So if less government is best and we are going to have a recession, of what incremental value would an Obama administration add?
Obama's current fiscal policies will only worsen the the recession.
Friday, October 17, 2008
It’s a perfect storm. It started with Congress encouraging lending to lower-income people. You went from subprime loans being 2% of total loans in 2002 to 30% of total loans in 2006. That kind of enormous increase swept into the net people who shouldn’t have been borrowing.
Those loans were packaged into CDOs rated AAA, which led the investment-banking firms [buying them] to do little to no due diligence, and the securities were distributed throughout the world, where they started defaulting.
When they started defaulting, out of bad luck or bad judgment, we implemented fair value accounting….You had wildly different marks for this kind of security, which led to massive write-offs by the commercial banking and investment-banking system.
In the face of those losses…you needed to raise new equity…which came from sovereign-wealth funds in part, which then caused political resistance to sovereign-wealth funds, who predictably have withdrawn from putting money into the system….It seemed pretty obvious that would happen. We now find ourselves with a liquidity crisis where fundamentally the cost of money for financial intermediaries [such as investment banks] is significantly in excess of their cost of lending it. So several institutions found themselves in a structurally impossible position. We had a series of bankruptcies, whether Bear Stearns or Lehman, or forced sales like Merrill. Goldman reverted to a banking charter for a lower cost of funds, which today is still not low enough for the business.
So that’s the story of how we got there.
Here's the political catch. All but the clean car credit would be "refundable," which is Washington-speak for the fact that you can receive these checks even if you have no income-tax liability. In other words, they are an income transfer -- a federal check -- from taxpayers to nontaxpayers. Once upon a time we called this "welfare," or in George McGovern's 1972 campaign a "Demogrant." Mr. Obama's genius is to call it a tax cut.
The Tax Foundation estimates that under the Obama plan 63 million Americans, or 44% of all tax filers, would have no income tax liability and most of those would get a check from the IRS each year. The Heritage Foundation's Center for Data Analysis estimates that by 2011, under the Obama plan, an additional 10 million filers would pay zero taxes while cashing checks from the IRS.The total annual expenditures on refundable "tax credits" would rise over the next 10 years by $647 billion to $1.054 trillion, according to the Tax Policy Center. This means that the tax-credit welfare state would soon cost four times actual cash welfare. By redefining such income payments as "tax credits," the Obama campaign also redefines them away as a tax share of GDP. Presto, the federal tax burden looks much smaller than it really is.
Some families with an income of $40,000 could lose up to 40 cents in vanishing credits for every additional dollar earned from working overtime or taking a new job. As public policy, this is contradictory. The tax credits are sold in the name of "making work pay," but in practice they can be a disincentive to working harder, especially if you're a lower-income couple getting raises of $1,000 or $2,000 a year.
Thursday, October 16, 2008
Why else, the color of green money from agri business lobby!
It's a clever pitch, because it lets him pose as a middle-class tax cutter while disguising that he's also proposing one of the largest tax increases ever on the other 5%. But how does he conjure this miracle, especially since more than a third of all Americans already pay no income taxes at all?
For the Obama Democrats, a tax cut is no longer letting you keep more of what you earn. In their lexicon, a tax cut includes tens of billions of dollars in government handouts that are disguised by the phrase "tax credit." Mr. Obama is proposing to create or expand no fewer than
- A $500 tax credit ($1,000 a couple) to "make work pay" that phases out at income of $75,000 for individuals and $150,000 per couple.
- A $4,000 tax credit for college tuition.
- A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).
- A "savings" tax credit of 50% up to $1,000.
- An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.
- A child care credit of 50% up to $6,000 of expenses a year.
- A "clean car" tax credit of up to $7,000 on the purchase of certain vehicles.
seven such credits for individuals:
Wednesday, October 15, 2008
Barring divine intervention, a President Obama would not have a Republican Congress to worry about. Instead, he would be working with a Democratic speaker of the House who loaded billions in pork onto a bill meant to fund our troops; with a Democratic Senate majority leader who promised to change the way Congress spent but fought earmark reform; and with committee leaders such as Sen. Chris Dodd and Rep. Barney Frank, who did so much to bring us the financial implosion of Fannie Mae and Freddie Mac.
In this kind of Washington, the American taxpayer could use a Gary Cooper: the "High Noon" lawman willing to stand up for us when everyone else is ducking for cover. Marshal McCain, anyone?
The Obama plan is all about expanding government health care. Mr. Obama is proposing a "public option" that is similar to Medicare but open to everyone of any age. With this new taxpayer-funded entitlement, private insurers would be crowded out as the government gradually paid all of the country's health-care costs.
Yet according to the Congressional Budget Office, federal spending on Medicare and Medicaid already takes up 4% of GDP today and will rise to an unsustainable 9% over the next two decades. Mr. Obama wants to add even more costs to this taxpayer balance sheet. The inevitable result as spending explodes would be price controls and rationing.
On choice, portability, quality and especially equity, the McCain health plan is far superior to Mr. Obama's. The Democrat is merely offering Canada on the installment plan.
Tuesday, October 14, 2008
He would offer a refundable tax credit of $5,000 for families, $2,500 for individuals, and the benefit isn't dependent on where people work or what they earn. Some would stick with their current job-based coverage. Given the option, others -- especially the uninsured, armed with new health dollars -- would decide to buy coverage on their own. That in turn would stimulate a market for more affordable insurance.
Mr. Obama doesn't want to let people make this choice. He even claims it would amount to "taxing your health-care benefits for the first time in history," which is a wild distortion. His point seems to be that because companies wouldn't have to pay for health care, they could raise wages and thus taxes would also increase for workers on those higher incomes. But doesn't Mr. Obama want higher wages?
All in all, workers would come out ahead with the McCain plan. According to the left-leaning Tax Policy Center, the average taxpayer would see his tax bill drop by $1,241 in 2009. On average, lower-wage workers have more limited coverage as part of their compensation, mostly from small- or medium-size businesses. But the more generous the employer health plan, the more the tax subsidies increase. According to the Joint Committee on Taxation, the current employer benefit is only worth between $600 and $3,000 for people making under $100,000. The upper-income brackets save between $4,000 and $5,000.
The most affluent -- i.e., the top quintile of earners -- would be slightly worse off after 2013 under the McCain plan, though they'd still have plenty of options. Even as he routinely promises to raise taxes on "the rich," Mr. Obama is leaping to their unlikely defense here only to frighten everyone else. The McCain plan is fairer than the status quo, which subsidizes the most expensive employer (and union) insurance plans.
But don't take our word for it. Mr. Obama's chief economic adviser agrees with the McCain critique of the current system, or at least he once did. "This massive program of tax breaks is ineffective and regressive, wasting money on those who have health insurance while doing little for those who can barely afford it and nothing at all for those without it," wrote Jason Furman in 2006 in the journal Democracy. Before he joined the Obama campaign, Mr. Furman championed a health reform that relied on many of the same tax tools as Mr. McCain's.
The advances comes form the private market satisfying consumer needs by creating compelling value in the marketplace. Big government can't replicate this.
Obama's government run healtcare policies will decrease the motivation for private companies to innovate. This is a huge opportunity cost to the American taxpayer.
Monday, October 13, 2008
From Greg Mankiw:
This number from the Census Bureau is often cited as evidence that the health system is failing for many American families. Yet by masking tremendous heterogeneity in personal circumstances, the figure exaggerates the magnitude of the problem.
To start with, the 47 million includes about 10 million residents who are not American citizens. Many are illegal immigrants. Even if we had national health insurance, they would probably not be covered.
The number also fails to take full account of Medicaid, the government’s health program for the poor. For instance, it counts millions of the poor who are eligible for Medicaid but have not yet applied. These individuals, who are healthier, on average, than those who are enrolled, could always apply if they ever needed significant medical care. They are uninsured in name only.
The 47 million also includes many who could buy insurance but haven’t. The Census Bureau reports that 18 million of the uninsured have annual household income of more than $50,000, which puts them in the top half of the income distribution. About a quarter of the uninsured have been offered employer-provided insurance but declined coverage.
Of course, millions of Americans have trouble getting health insurance. But they number far less than 47 million, and they make up only a few percent of the population of 300 million.
Any reform should carefully focus on this group to avoid disrupting the vast majority for whom the system is working. We do not nationalize an industry simply because a small percentage of the work force is unemployed. Similarly, we should be wary of sweeping reforms of our health system if they are motivated by the fact that a small percentage of the population is uninsured.
McCain would provide you with an carrot, a $5000 tax credit, IF you choose to buy insurance.
Here is the research behind the affordability of the uninsured.
The authors first look at what people can "afford," based on whether household income is above or below the federal poverty line (or some multiple of the poverty line), adjusting reported income for differences between insured and uninsured adults attributable to employer premium payments for health insurance. They find that the insurance-adjusted poverty rate for adults aged 25-64 in 2000 was 10.5 percent; on that basis, health insurance is unaffordable for 10.5 percent of adults aged 25-64. For the whole sample, using the poverty line as a benchmark, 71 percent of the currently uninsured population could afford health insurance coverage. Increasing the definition of affordability to family income exceeding three times the poverty threshold, the proportion of "uninsured afforders" declines to 28 percent.
Bundorf and Pauly also present a number of estimates defining affordability thresholds according to the proportion of individuals with similar characteristics who purchase insurance. Using a definition of health insurance as affordable if the majority of people in similar circumstances purchase coverage, the authors find that health coverage was affordable to between 59 and 66 percent of the insured, depending on the characteristics used to define individuals as similar. Using the threshold that 80 percent of similar households purchase insurance, they find that around 25 percent of the uninsured could afford coverage based on peer comparisons.
Thus, the researchers conclude that the affordability of health insurance, measured in various ways, is not a particularly accurate predictor of whether a person will obtain coverage. It is certainly not the only explanation of observed patterns of insurance coverage. The broad picture that emerges from the authors' tests is that between 25 percent and 75 percent of people who do not purchase coverage could afford to do so. This provides a clearer framework for policy decisions and for prioritizing where public assistance is required.
From The American:
One economically smart policy option that has been gaining traction in the last few years is “consumer-driven” healthcare, which channels health money into the hands of patients and then requires them to make correspondingly higher copayments. The economic principle is that a system of low copays, in which most of the cost is detached from how much care the patient uses, has encouraged patients to consume more care than they actually need. With higher fees, coming from their own pockets, patients will be less likely to over-consume care—and the system as a whole will function more efficiently.
Sunday, October 12, 2008
The Obama plan would also create new subsidies to cover the uninsured and help people facing high health costs. That, and the fact that we can’t expect to see savings in the health sector that approach the promises made by the campaign, will unavoidably mean higher taxes. The Senator would increase the top two income tax brackets, raise the top capital gains tax rate, raise the top dividends tax rate, increase payroll taxes, and bring back the estate tax. According to the Urban Institute-Brookings Institution Tax Policy Center, those proposed tax increases would yield an additional $600 billion in revenue — but only over the next decade. That is not a great deal of new money for a major expansion of health programs (much less for one costing several hundred billion a year) and other initiatives supported by the candidate.
Sen. Obama’s plan will ensure that someone writes a check to cover the high cost of your health care. But that someone will probably be you.
And just watch the Great Obama perform a feat never yet managed in all history. He will create that enormous new government health program, spend billions to transform our energy economy, provide financial assistance to former Soviet satellites, invest in infrastructure, increase education spending, provide job training assistance, and give 95% of Americans a tax (ahem) cut -- all without raising the deficit a single penny! And he'll do it in the middle of a financial crisis. And with falling tax revenues! Voila!
Saturday, October 11, 2008
Is that the sign of an agent of change and hope? It seems like a desperation measure.
From Kevin Ferris:
Department. Never mind those indictments and jail terms.
But by calling McCain a bigot, what signals is the Obama campaign sending about an Obama administration? If you're against his tax policies, it's because you think he has a funny name? Is opposition to his Iraq plan purely intolerance? If you think he's wrong on immigration, is that simply code for racism?
Does he really want to suggest that's how he would govern?
Racism and prejudice exist. But while attacking them with a broad partisan brush might score political points, it also worsens the fears and divisions among us. Often the accusations encompass so much - from individual attitudes to complex and difficult issues such as housing, education and health care - that no real solution is even possible.
That means Obama will have a hard time reallocating the tax dollars for this spending programs.
An analysis of Russia’s state spending shows that Vladimir Putin’s Kremlin is taking the country in a dangerous direction, girding for a new Cold War while neglecting the domestic infrastructure. Military and security spending is so lopsided in Russia that the country’s cash cow - the energy sector - is being starved of funds.
According to figures recently released by the State Committee for Statistics, Russia’s revenue for the first half of 2008 amounted to almost 4.4 trillion rubles, or, at the current exchange rate, about $176.5 billion. Expenditures totaled almost 3 trillion rubles, or $120.9 billion. Overall, the Russian government is projected to spend almost 7 trillion rubles, or $278.6 billion, under the full-year 2008 budget.
Friday, October 10, 2008
- Barack asked the Iraqi foreign minister to delay US troop withdrawal until after the US elections?
- Obama lied when he said McCain wanted to extend the war in Iraq for 60 to 100 years?
- Barack's minions have hired and/or moved lawyers/investigators into Alaska to destroy Governor Palin and her family?
- Obama claimed the surge hasn't worked right up until he appeared on the O'Reilly Factor just weeks ago?
- Barack claims he's for individual ownership of firearms, yet backs those communities that ban guns?
- Barack said, "I've been in 57 states-I think one left to go?"
- Obama's church gave a lifetime achievement award to white hating anti-Semite Louis Farrakhan?
- Obama claimed that his tire gauge/tune-up solution to our energy crisis, would gain us just as much oil as off-shore drilling?
- Barack was the second highest recipient of Fannie Mae contributions with three years in the US Senate, only beaten out by the chair of the US Senate banking committee, 30 year senate veteran, Chris Dodd?
- Barack claimed he never heard his minister, Reverend Wright say those hateful things about the USA in his 20 years of sitting through his sermons?
- Both Hillary Clinton and Joe Biden recently said Barack didn't have the experience to be president?
- Obama misled America when he placed Spanish speaking ads in southwestern states taking Rush Limbaugh out of context?
- Barack started his political career with a fundraiser in unrepentant terrorists Bill Ayers and Bernardette Dohrn's living room?
- Barack waffled on the Iraqi war in 2004 by telling the Chicago Tribune that his and George Bush's positions were basically the same?
- Barack said those in small towns, "...cling to guns and religion...as a way to explain their frustrations" to a crowd of elitist west coasters in San Francisco?
- Obama is in favor of denying medical aid to botched aborted living babies?
- Barack claimed Iran, as a tiny country, was no threat to the USA?
In 4 weeks, the country will likely elect Barack Obama; Congress will be overwhelmingly in the hands of the Democratic Party. Mr. Obama has made it clear that he will increase taxes on corporation and those earning more than $250,000. His plans include health coverage for all Americans and major spending initiatives on education and infrastructure. With colossal deficits, a protectionist Congress, tax increases coming, and gigantic spending initiatives, the next 4 years will be exceptionally difficult for the US. economy.
Obama is selling his own fantasies. He told Harwood that he would not alter his plans for a middle-class tax cut, adding that "It's important to pay for it." How? Through closing "tax havens and loopholes." In other words, sticking it to the "bad guys" without any pain for the rest of us. Sorry, but that's just not a serious proposal.
When asked if he would cut back his $100 billion plan to extend healthcare coverage, Obama demurred by saying, "Keep in my mind, my healthcare plan is paid for."
Well, no, it's not. Paying for it would require abolishing the Bush tax cuts for "the wealthiest Americans." And unless a President Obama has a filibuster-proof majority of 60 Democratic senators — which he won't — repealing those tax cuts would be extremely difficult.
Another favorite Obama fantasy, especially popular with union members in swing industrial states like Ohio and Michigan: Renegotiate (or even negate) the NAFTA trade pact, and steel and auto jobs will return to the Rust Belt like swallows to Capistrano. No, they won't.
The next president will inherit a real mess: a slumping economy, soaring budget deficits and very few dollars to spend on new initiatives. So when the candidates tell you to believe in Tinkerbell, resist the temptation to clap.
Under these circumstances, the need to manage their political risk became paramount, and this required them to prove to their supporters in Congress that they still served a useful purpose. In 2003, as noted above, Frank had cited an arrangement in which the GSEs' congressional benefits were linked to their investments in affordable housing. In this context, substantially increasing their support for affordable housing--through the purchase of the subprime loans permitted by HUD--seems a logical and even necessary tactic.
Unfortunately, the sad saga of Fannie and Freddie is not over. Some of their supporters in Congress prefer to blame the Fannie and Freddie mess on deregulation or private market failure, perhaps hoping to use such false diagnoses to lay the groundwork for reviving the GSEs for extra constitutional expenditure and political benefit in the future. As the future of the GSEs is debated over the coming months and years, it will be important to remember how and why Fannie and Freddie failed. The primary policy objective should be to prevent a repeat of this disaster by preventing the restoration of the GSE model.
Thursday, October 09, 2008
McCain-Palin will address the problem in more direct way and lessen the chance of a repeat mortgage melt down.
From the AEI
Even if the earlier affordable housing projects were not losers, however, they represented a new and extra-constitutional way for Congress to dispense funds that should otherwise have flowed through the appropriations process. In one sense, the expenditures were a new form of earmark, but this earmarking evaded the constitutional appropriations process entirely. An illustration is provided by a press release from the office of Senator Charles E. Schumer (D-N.Y.), one of the most ardent supporters of the GSEs in Congress. The headline on the release, dated November 20, 2006--right in the middle of the GSEs' affordable housing spending spree--was "Schumer Announces up to $100 Million Freddie Mac Commitment to Address Fort Drum and Watertown Housing Crunch." The subheading continued: "Schumer Unveils New Freddie Mac Plan with HSBC That Includes Low-Interest Low-Downpayment Loans. In June, Schumer Urged Freddie Mac and Fannie Mae Step Up to the Plate and Deliver Concrete Plans--Today Freddie Mac Is Following Through." If this project had been economically profitable for Fannie or Freddie, Schumer would not have had to "urge" them to "step up." Instead, using his authority as a powerful member of the Senate Banking Committee--and a supporter of Fannie and Freddie--he appears to have induced Freddie Mac to make a financial commitment that was very much in his political interests but for which the taxpayers of the United States would ultimately be responsible.
Of course, Schumer was only one of many members of Congress who used his political leverage to further his own agenda at taxpayer expense and outside the appropriations process. The list of friends of Fannie and Freddie changed over time; while the GSEs enjoyed broad bipartisan support in the 1990s, over the past decade, they have become increasingly aligned with the Democrats. This shift in the political equilibrium was especially clear in the congressional reaction to the GSEs' accounting scandals of 2003 and 2004.
I am particularly concerned about bad policies because significantly higher taxes have been proposed by Barack Obama. His plan would raise the marginal tax rate on the most productive workers more than 10 percentage points -- an increase that would bring us near Western European levels. His plan would also raise capital income taxes, taxing capital gains and dividends at 20%, compared to a 15% rate under Sen. John McCain's plan.
A five percentage-point difference might strike you as small, but it is not. I have calculated that a five percentage-point difference in overall capital income taxation over the long haul is equal to a difference in the nation's capital stock of about 18%. This means a 6% difference in GDP and a 6% difference in the average wage rate. This means that real GDP and the average wage would fall, gradually but persistently declining about 6% after 25 years. That's not quite a Great Depression, but a significant step towards one.
Liberals seem to believe that because they hold enlightened positions, they possess an ideological holiness that prevents them from committing certain sins. How else do you explain the unmerited immunity liberals conferred on Joe Biden for his obviously racially demeaning remarks about Barack Obama's cleanliness and articulateness or his references to Indian workers at Dunkin' Donuts?
It's not just that they want Biden to win; it's that they believe that as a fellow liberal, he couldn't possibly make a prejudiced statement. But he did, and we all know it. For normal people, it's "live by the sword, die by the sword." For anointed liberals, it's "live by the sword; long live the sword wielder."
Wednesday, October 08, 2008
From Mona Charen:
The Democrats have nominated the most left-leaning presidential candidate in history. And they are now using this financial crisis as an opportunity to recast this election as Hoover against Roosevelt. Their narrative is simple and easy to understand (though false). Laissez-faire economics under Bush allowed capitalists to destroy the economy today just as they did during the Great Depression. The solution is to put Democrats in charge of all three branches. Republicans have responded that much of the blame for the current mess lies with Democrats who pushed for the Community Reinvestment Act, coddled Fannie Mae and Freddie Mac, and resisted vigorous oversight (by, for example, accusing anyone who questioned the subprime mortgages of racism). And by the way, Roosevelt didn't get us out of the Great Depression. World War II did.
From Juan Enriquez from an OpEd in the Boston Globe
A solution requires the country to begin to spend what it earns, reduce its mountainous debt, and address massive liabilities, restructure Social Security, pension deficits, military, and Medicare. No wonder politicians would rather spend more of your money now rather than address these problems. Because we have been spending 5 to 7 percent more each year than we earn, a forced restructuring, triggered by a currency collapse, would have the same effect on wages and purchasing power that the housing collapse had on housing prices. So let's learn from our Latin and Asian friends and act before it is too late.
Tuesday, October 07, 2008
According to Nielsen 70 million viewers watched the debate and I am sure they did not tune in to watch Biden.
For an 'inexperienced' Governor, with more executive experience than either Biden or Obama, Palin proved that she can go toe to toe with an experienced politician.
Wonder why SNL did not do any Joe Biden sketches?
McCain is the candidate for Women!
While Sen. Barack Obama’s presidential campaign has produced a television ad criticizing Sen. John McCain’s position on equal pay for women and pointing out that women in America are paid only 77 cents on the dollar compared to men, Obama pays his own female Senate staffers, on average, only 78 percent of what he pays male staffers. ... McCain, an Arizona Republican, has paid women on his Senate staff a higher average salary than he pays men and Obama has paid men a higher average salary than he pays women.
“Now is the time to keep the promise of equal pay for an equal day's work," Democratic presidential nominee Barack Obama said August 28 in his convention acceptance speech. He told the crowd in Denver: "I want my daughters to have exactly the same opportunities as your sons."
Sen. Biden also talked about small businesses:
On the issue of small businesses, the "95 percent" figure is technically true, but those small businesses make up a much smaller fraction of the total small business income in America. It's not even close to 95 percent. In fact, approximately half of all small business income is earned by those tax returns that would face a tax hike under Sen. Obama's tax plan.
...95 percent of the small businesses in America, their owners make less than $250,000 a year. They would not get one single solitary penny increase in taxes, those small businesses.
From Greg Mankiw:
For example, look at the results for 2012. Under current law, the Bush tax cuts will expire, and the average marginal tax rate, calculated using my quadratic averaging, will be 28.7 percent. If the Bush tax cuts are extended, the average marginal tax rate will be 25.5 percent. The McCain plan would keep the average marginal tax rate at about this level (25.3 percent), while the Obama plan would raise the average marginal tax rate to 28.0 percent.
Monday, October 06, 2008
Investments in equipment creates jobs, hiring workers creates jobs. The government can't create jobs.
In addition lower taxes will put more money in the hands of individuals and they can choose to spend or save. The government inherently makes poor decisions and individuals and markets make better decisions.
Obama Biden's tax policies will hurt the economy. From the Tax Foundation:
A little later in the debate, Joe Biden made this statement:
The middle class under John McCain's tax proposal, 100 million families, middle class families, households to be precise, they got not a single change, they got not a single break in taxes. No one making less than $250,000 under Barack Obama's plan will see one single penny of their tax raised whether it's their capital gains tax, their income tax, investment tax, any tax. And 95 percent of the people in the United States of America making less than $150,000 will get a tax break.
Actually the "100 million" figure is not families. It is not households. It is tax returns. But that's a somewhat minor issue in the whole scheme of things. The figure is incorrect because Sen. McCain, even relative to a current policy with Alternative Minimum Tax (AMT) patch baseline, does cut corporate income taxes and provides his refundable health care tax credit, which would reduce that "100 million won't get a tax break" figure. That figure is technically correct if you look only at the individual income tax and ignore Sen. McCain's health care tax plan, and if you do it relative to a current policy baseline with AMT patch. Furthermore, Sen. Biden makes the same error as Barack Obama in mixing baselines. The "95 percent" figure (when properly used) gives Obama credit for an AMT patch whereas he does not give McCain credit for an AMT patch tax cut when referring to the 100 million figure.
But the "95 percent" figure is just plain wrong as well. According to the Tax Policy Center, no income quintile (including those earning under $150,000) would even see 95 percent of its tax units receiving a tax break under Pres. Obama's tax plan in 2009. Even in 2012 under Obama's tax plan relative to current law, an average of the fraction of tax units that receive a tax cut in the bottom four quintiles is less than 90 percent. In other words, Biden's statement is factually incorrect. The "95 percent" figure is fairly accurate when Obama uses it to talk about the fraction of working families that would receive a tax cut under his plan, but not the entire population nor the entire population earning under $150,000.
Regarding Sen. Biden's claim that no American making less than $250,000 per year would see a tax hike, that is incorrect too. Some Americans making less than $250,000 would see a tax increase under Pres. Obama. For example, the Tax Policy Center estimates that in 2009, 14.8 percent of tax units earning between $111,645 and $160,972 would actually see a tax increase under Pres. Obama's proposed tax plan, relative to current law. Now it is true that 83.3 percent of the tax units in that group would see a tax cut, but to say that "no one making less than $250,000 under Barack Obama's plan will see one single penny of their tax raised" is factually incorrect.
From Mark Perry:
When it comes to giving money to charities, it's not even close: the Palins are almost 12 times as generous as the Bidens, when measured by charitable contributions as a percent of Adjusted Grosss Income (AGI) in 2006 and 2007: 2.79% average for the Palins in those two years, vs. 0.24% for the Bidens (see top chart above).
And even though the Palins ($294,000) earned only about half the income of the Bidens ($569,000) in 2006 and 2007 combined, the Palins gave almost 6 times as much to charity ($8,205) in those two years as the Bidens ($1,375), see bottom chart above.
Sunday, October 05, 2008
The reason I say "curious" is that there's very little evidence that presidents (or the government more generally) have much impact on the current state of the economy. They can influence long-term performance, but in the short term, the US economy, and others, go through periodic ups and downs that we call business cycles. That was true 200 years ago and remains true today. There's some debate about where business cycles come from, but the president's actions are rarely on the list. Nevertheless, it's become good strategy to claim credit for good news and blame the other guys for bad news -- even though neither is likely.
Thursday, October 02, 2008
She is coming out with e Pro Obama book which in my mind is another example of bias in the media.
Columnist Michelle Malkin, in a post on her blog today, wonders how Ifill can objectively moderate the debate tomorrow night with the personal interest she has in the election's outcome.
"My dictionary defines 'moderator' as 'the nonpartisan presiding officer of a town meeting.' On Thursday, PBS anchor Gwen Ifill will serve as moderator for the first and only vice presidential debate. The stakes are high. The Commission on Presidential Debates, with the assent of the two campaigns, decided not to impose any guidelines on her duties or questions.
"But there is nothing 'moderate' about where Ifill stands on Barack Obama. She's so far in the tank for the Democrat presidential candidate, her oxygen delivery line is running out," Malkin writes.
"Ifill and her publisher are banking on an Obama/Biden win to buoy her book sales. The moderator expected to treat both sides fairly has grandiosely declared this the 'Age of Obama.' Can you imagine a right-leaning journalist writing a book about the 'stunning' McCain campaign and its 'bold' path to reform timed for release on Inauguration Day – and then expecting a slot as a moderator for the nation’s sole vice presidential debate?"
Malkin cited Ifill's previous reporting on Obama for "Essence" magazine, an article titled, "The Obamas: Portrait of an American Family." Ifill's "neutral analysis" about Michelle Obama, Malkin said with irony, was, "A lot of people have never seen anything that looks like a Michelle Obama before. She's educated, she's beautiful, she's tall, she tells you what she thinks and they hope that she can tell a story about Barack Obama and about herself. …"
Fox News commentator Greta Van Susteren reported the McCain campaign didn't know about the book.
"It simply is not fair – in law, this would create a mistrial," she said.