Thursday, March 26, 2009
What Mr. Becker has seen over a career spanning more than five decades is that free markets are good for human progress. And at a time when increasing government intervention in the economy is all the rage, he insists that economic liberals must not withdraw from the debate simply because their cause, for now, appears quixotic.
But he complains about "counterproductive" government policies "designed to lower mortgage rates to stimulate demand." He says he was against the Bush Treasury's idea of capping mortgage rates (which was only floated) and he has "opposed the mortgage plan of President Obama." "It goes against both these adjustments . . . it would hold up prices and increase construction. I think that's a bad idea at this time."
On the subject of recovery, Mr. Becker repeats his call for lower taxes, applauds the Fed's action to "raise reserves," (meaning money creation, though he said this before the Fed's action a few days ago), and he says "I do believe one has to try to do something more directly to help with the toxic assets of the banks."
"When you get a larger government, when you have the government taking over Social Security, government taking over health care and with further proposals now for the government to take over more activities, more entitlements, the rational response is to have less responsibility. You don't have to worry about things and plan on your own as much."
Thursday, March 19, 2009
As the AIG bonus scandal explodes, Republicans are looking for ways to blame the president and the majority party. Privately, some admit that this is the first attack that’s sticking after two months of grappling with the administration and its economic policies. In private and in public, some conservatives are cool toward attacking AIG’s bonuses and demanding more government regulation of companies that receive TARP money — even if it’s a one-time deal. And some conservatives are attempting to shift the focus of voter outrage from the bonuses to the bailouts themselves.
“There is a fair degree of hypocrisy in this,” said one Republican House staffer. “It’s as if Geithner had been Treasury secretary for last three years and Obama was president in September. We had a bipartisan vote for the bailout - although the opposition was bipartisan, too. Neither party comes to this with clean hands.” The staffer echoed the public statements of some conservative members of Congress — that the frenzy of bonus-bashing was moving the debate further to the left, and losing focus for the larger battle against endless big-business rescue packages and government intervention in the economy.There is no unified Republican argument against the AIG bonuses, and there is some surprise at how quickly the party’s leaders have adopted a populist campaign to penalize AIG and pull back the bonuses. The NRCC and House Minority Whip Eric Cantor are attacking Democrats as tacit supporters of the AIG stimulus, a strategy that took several days to get off the ground.
Wednesday, March 18, 2009
But Obama and the Democrats wrote and passed a law that protected the bonuses paid out by AIG and other institutions that received TARP funds.
"Fair or not, questions about why Mr. Geithner did not know sooner about the A.I.G. bonuses and act to stop them threaten to overwhelm his achievements and undermine Mr. Obama’s overall economic agenda."
As Treasury Secretary, Geithner is responsible for communicating with the Federal Reserve since these two institutions work hand in hand. Since the Federal Reserve legally owns the AIG stake, and the Treasure is part of the Executive branch, the Treasury is responsible for acting like the owner and keep a close watch on AIG. Apparently nothing happened.
"The A.I.G. tempest has been especially explosive for Mr. Geithner because, as president of the New York Fed, he was the one administration official who had been involved in the Bush-era bailouts. "
How long will he last?
From the timesonline:
Livestock contribute 18 per cent of the greenhouse gases believed to cause global warming, according to the UN Food and Agriculture Organisation. The Danish Tax Commission estimates that a cow will emit four tonnes of methane a year in burps and flatulence, compared with 2.7 tonnes of carbon dioxide for an average car.
He should also consider taxing all the hot air coming from his administration.
Tuesday, March 17, 2009
WASHINGTON — The Obama administration is signaling to Congress that the president could support taxing some employee health benefits, as several influential lawmakers and many economists favor, to help pay for overhauling the health care system.
The proposal is politically problematic for President Obama, however, since it is similar to one he denounced in the presidential campaign as “the largest middle-class tax increase in history.” Most Americans with insurance get it from their employers, and taxing workers for the benefit is opposed by union leaders and some businesses.In television advertisements last fall, Mr. Obama criticized his Republican rival for the presidency, Senator John McCain of Arizona, for proposing to tax all employer-provided health benefits. The benefits have long been tax-free, regardless of how generous they are or how much an employee earns. The advertisements did not point out that Mr. McCain, in exchange, wanted to give all families a tax credit to subsidize the purchase of coverage.
Monday, March 16, 2009
New Jersey’s Democratic Governor Jon S. Corzine, who hopes to win a second term in November, has now fallen behind Republican challenger Christopher J. Christie by 15 points – 49% to 34%.
The survey was taken Tuesday, the day Corzine was announcing $916 million in new and increased taxes as part of his $29.8 billion state budget for 2010.
This might be a glimpse into the mood of the electorate. With Obama's reckless spending, higher taxes, higher deficts, higher debt, lower poll numbers, you can make a strong case that the narrow margin of victory is pretty shaky for Obama.
Friday, March 13, 2009
Kundra told attendees that in his new role as federal CIO, he is "embarking on a technology revolution in government." But much of his talk to an audience of government workers and federal IT vendors was a morale-boosting rally.
For instance, Kundra promised to undo the image of the federal government as a laggard in technology adoption and innovation. "We can be thought leaders when it comes to innovation," he said.
Kundra promised to hold voluntary open-door sessions on weekends for federal IT workers who want to share their views on "high-level" technology issues. He said that he has been "amazed" by the IT talent he is finding within the government, and that some of "the smartest people I've ever met in my life are federal government employees."
Wednesday, March 11, 2009
The consumer's mind set is now turning to a economic depression according to a Rasmussen poll.
Most Americans (53%) now think the United States is at least somewhat likely to enter a 1930’s-like depression within the next few years.
The latest results are more pessimistic than those found in early January, when 44% said a 1930’s-like depression was likely in the next few years, and 46% disagreed.
In March 2008, only 38% of adults said the country is likely to slip into a depression, while most (55%) disagreed.
The most recent survey also found that half of all adults (49%) say today’s children will not be better off than their parents. Only 26% hold the more optimistic view, while another 25% are not sure. Those results have changed little from January, when only 27% said children will be better off and 47% disagreed. Twenty-six percent (26%) were undecided at that time.
Sunday, March 08, 2009
The Politico has an interesting piece on this. Some highlights:
“I’ve had more unsolicited offers for participation from the Obama people in 45 days than in the last eight years from Bush,” said Rosenthal (NYT Editorial page director).
Rosenthal said the Obama administration’s approach is consistent with the one the Obama campaign used, and for a reason: It worked. Citing an example, he said that an Obama campaign aide succeeded in convincing him back in July — before an editorial ran — that Obama had not, in fact, reversed his position on a controversial D.C. handgun ban.
Washington Post editorial page editor Fred Hiatt said in an e-mail that the Obama team has been “open and responsive” to requests from The Post’s editorial writers. Hiatt said that helps The Post “produce smarter and more knowledgeable editorials.”
But the White House knows that what gets written in Washington and New York filters out into the country — and that it needs support from those who are most likely to get their news from the inside-the-Beltway press, members of Congress, policy wonks and, of course, other journalists.
Creszenzi figured consumers might go back to saving about 9% of their disposable incomes, the savings rate that prevailed from the 1950s through the early 1980s.
Saturday, March 07, 2009
Which brings me to the bailout.The psychological trouble with current attempts to fix the economy by stimulation is that they don't have that air of unpredictable inevitability that is associated with good music and inspired action. Everything the people in authority now do has an air of delayed predictability. The nationalization of failing banks, when it comes, will be accompanied by the sound of dragging heels. I have an image of a child being reluctantly pulled towards the bedroom, his heels scraping against the carpet as he resists the inevitable bedtime.
What's needed is to get people confident enough about the future to spend again. I'm increasingly skeptical that public spending will quickly effect this, because confidence is shot. Everyone is going to be cautious about spending for a long time from now on, Keynes or no Keynes. The velocity of money slows as everyone starts to hoard, and GDP declines despite an increase in money supply. One way to fix this is to charge a fee for saving your money, i.e. negative interest, or high inflation, use it or you lose it, but that's fearful velocity, not confident velocity. Another is lower taxes, putting more money permanently in people's pockets, but that leaves less for government spending initially, and has no effect on the unemployed. A third is a charismatic confidence-inspiring leadership, but think Germany in the Thirties. I'm a little stymied for now, and so, I sense, is everyone else. There's no quick fix and no substitute for good fresh wise leadership.
Friday, March 06, 2009
From the Washington Times:
The charitable giving deduction reduction, which would limit deductions for couples making $250,000 or individuals making $200,000, provoked the most heat Thursday. Mr. Obama is counting on that provision to raise $179.8 billion over 10 years.
"This will lead people to give less to charities if they behave the way they've behaved in the past," he said. "We've already seen a drop in giving as a result of the economic collapse. On top of that, this will just reduce the amount of giving."
Asked about that, Office of Management and Budget Director Peter Orszag said Mr. Obama took care of that by giving charities government money to make up part of the difference. "Contained in the recovery act, there's $100 million to support nonprofits and charities as we get through this period of economic difficulty," he said.
Thursday, March 05, 2009
The government is making it worse. It's pretty embarrassing for President Obama, who doesn't seem to have a clue what's going on—which would make sense from his background. And he has hired people who are part of the problem. [Treasury Secretary Tim] Geithner was head of the New York Fed, which was supposedly in charge of Wall Street and the banks more than anybody else. And as you remember, [Obama's chief economic adviser, Larry] Summers helped bail out Long-Term Capital Management years ago. These are people who think the only solution is to save their friends on Wall Street rather than to save 300 million Americans.
I'd like to see them let these people go bankrupt, let the bankrupt go bankrupt, stop bailing them out. There are plenty of banks in America that saw this coming, that kept their powder dry and have been waiting for the opportunity to go in and take over the assets of the incompetent. Likewise, many, many homeowners didn't go out and buy five homes with no income. Many homeowners have been waiting for this, and now all of a sudden the government is saying: "Well, too bad for you. We don't care if you did it right or not, we're going to bail out the 100,000 or 200,000 who did it wrong." I mean, this is outrageous economics, and it's terrible morality.
Wednesday, March 04, 2009
The bottom line is that I fully believe the American Recovery and Reinvestment
Act will have the effects we said it would.
We are projecting somewhat stronger growth than some private forecasters. In part, this is due to the fact that we did the forecast two months ago, and the economic news since then has not been good. But the more fundamental reason is that we firmly believe the stimulus package, together
with financial stabilization and our housing policy, will have a tremendous impact. I understand that actual developments may prove me wrong. But everything I know from history and macroeconomics tells me that the policies we are taking will make a crucial difference.
Given the breadth, depth, and expected length of the downturn, we need broad stimulus – some that will come on line quickly and some that will give the economy a boost next year, and stimulus that will affect all sectors and regions.
Tuesday, March 03, 2009
If you are a deficit hawk who lamented the Bush budget deficits, the new administration's budget should not make you feel much better. President Obama will give us different fiscal priorities than President Bush did, but the borrowing and debt imposed on future generations will not be very different, at least if the numbers presented in the Obama administration's own budget document can be trusted.
During the period 2005 to 2007, the U.S. unemployment rate hovered in the ballpark of 5 percent. What was the budget balance? According to OMB historical documents, the budget deficit averaged just under 2 percent of GDP during those three years.
Now compare these results to the new Obama budget. According to their numbers, under their proposed policies, the budget deficit will average a bit over 3 percent of GDP during that time.
Monday, March 02, 2009
White House officials said Sunday that President Obama would sign a $410 billion spending bill that includes thousands of pet projects, known as earmarks, despite campaign promises to put an end to the practice.
In appearances on television talk shows, Mr. Obama’s budget director and chief of staff both played down the issue. “We want to just move on. Let’s get this bill done, get it into law and move forward.”
Officials estimate that the omnibus spending bill, meant to pay for government operations through Sept. 30, contains nearly 9,000 provisions added by legislators to use public money to pay for projects in their home districts.
The earmarks account for at least $3.8 billion of the total spending in the package, according to estimates, including $1 million to control Mormon crickets in Utah, $162,000 to control rodents in Hawaii, and money for the presidential libraries of three Democrats: Franklin D. Roosevelt ($17.5 million), John F. Kennedy ($22 million) and Lyndon B. Johnson ($2 million).The legislation would increase overall spending by 9 percent compared with last year, including significant increases for health care, education and energy.
Sunday, March 01, 2009
From Niall Ferguson is Laurence A. Tisch professor of history at Harvard University
The resources available for policing the world are certain to be reduced for the foreseeable future. That will be especially true if foreign investors start demanding higher yields on the bonds they buy from the United States or simply begin dumping dollars in exchange for other currencies.
Economic volatility, plus ethnic disintegration, plus an empire in decline: That combination is about the most lethal in geopolitics. We now have all three. The age of upheaval starts now.
Barack Obama now faces a much larger and potentially more troubling axis—an axis of upheaval. This axis has at least nine members, and quite possibly more. What unites them is not so much their wicked intentions as their instability, which the global financial crisis only makes worse every day. Unfortunately, that same crisis is making it far from easy for the United States to respond to this new “grave and growing danger.”
Iran, meanwhile, continues to support both Hamas and its Shiite counterpart in Lebanon, Hezbollah, and to pursue an alleged nuclear weapons program that Israelis legitimately see as a threat to their very existence.
The democratic governments in Kabul and Islamabad are two of the weakest anywhere. Among the biggest risks the world faces this year is that one or both will break down amid escalating violence. Once again, the economic crisis is playing a crucial role. Pakistan’s small but politically powerful middle class has been slammed by the collapse of the country’s stock market. Meanwhile, a rising proportion of the country’s huge population of young men are staring unemployment in the face. It is not a recipe for political stability.
This club is anything but exclusive. Candidate members include Indonesia, Thailand, and Turkey, where there are already signs that the economic crisis is exacerbating domestic political conflicts. And let us not forget the plague of piracy in Somalia, the renewed civil war in the Democratic Republic of the Congo, the continuing violence in Sudan’s Darfur region, and the heart of darkness that is Zimbabwe under President Robert Mugabe. The axis of upheaval has many members. And it’s a fairly safe bet that the roster will grow even longer this year.