Monday, November 24, 2008

Obama's Economic Team falls Flat At 1st Try

Greg Mankiw pick apart the Obama economic policy to create 2 million jobs.

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

Recessions Help Global Warming - Why Does Obama want to stimulate the economy now?

Why would you want to artificially stimulate the economy if you are concerned about climate change?

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.

Why Was Sen Russ Feingold Sillent While His Pal Obama Spent $600 million on the election?

It is a shame that someone like Russ Feingold did not come out swinging against Obama for raising $600 million for his campaign and for breaking his pledge to take public money.

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

Obama on Course to Back Track on Iraq

From the WSJ:

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

Summers was instrumental in helping pass the Graham Leach Bliley that put the final nail in the Glass-Steagall Act. It allowed banks to offer investment banking and insurance services. It lead to some of the current problems that banks face. Some banks took on excess lending risks (knowing that the govenrment will bail them out) and invested in risky assets.

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.

Obama Hires More Clinton White House Veterans - Woo Hoo.! More Change!

From the WSJ:

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

Unions Begin Their Begging For Favors From Obama

From the Washington Post:

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.

Some Think Obama Will Be Pragmatic and Move to the Center. Me thinks he stays to the left.

With more data pointing to a prolonged multi-year recession, lower government revenues, higher government debt ceiling and deficits, there is school of thought emerging that Obama will put his spending ambitions on hold and work with Congress to pump up the economy.

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

Biden Wants to Be Like Gore - Hires Ex Clinton Admin official

Wow. More change from Obama-Biden.

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.

The Republicans in the Senate Should Draw a LIne In The Sand & Take on Obama

The Republicans in the Senate need to block Obama's liberal policies and offer their own solution based on their libertarian, less government principles.

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

Gotta Love Obama! Change we Need

From the LA Times:

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

Peek At Obama's Inaugural address Pt 3

There must be a strict supervision of all banking and credits and investments. There must be an end to speculation with other people's money. And there must be provision for an adequate but sound currency.

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

Peek At Obama's Inaugural address Pt 2

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.

We must act. We must act quickly.

Monday, November 10, 2008

Peek At Obama's Inaugural address Pt 1

This is a day of national consecration. And I am certain that on this day my fellow Americans expect that on my induction into the Presidency, I will address them with a candor and a decision which the present situation of our people impels.

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

Dirty Democrats & The Bailout bill

Looks like Obama & his democratic boys are going to spend the bailout dollars wisely! Not

From Slate:

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

Response to Krugman - There is something wrong wih you!

Paul Krugman asks the following in his NYT oped:

'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

Another Reason Not To Vote For Obama - Democratic Hypocrisy

From the NYTimes

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

Wisdom for the Foolish from Obama

From Mort Kondrake

"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.