Jun 12, 20080

Congressional Democrats Forget Key Part of Obama’s Relief Package

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CQ Politics is reporting that some key pieces of the fiscal relief package that Obama proposed have already been dropped from the plans of Congressional leadership:

Democrats have been contemplating a second effort to inject money this year into the faltering economy. The idea appears to have gained traction, particularly among congressional leaders, since Monday when presumptive Democratic presidential nominee Sen. Barack Obama of Illinois outlined a $50 billion stimulus proposal that will serve as the centerpiece of a two-week economic tour of battleground states.

Though the prospects for a second stimulus package are slim, the debate gives congressional Democrats an opportunity to rally around Obama.

The massive economic stimulus package enacted in February focused on tax breaks for businesses and rebates for individuals and families.

Obama has proposed a second round of rebate checks, an extension of unemployment insurance, aid to state governments and a new $10 billion fund to help stem the tide of home foreclosures.

He also proposed increasing investment in infrastructure such as roads, schools and bridges.

“There’s a need for additional targeted stimulus,” said Senate Budget Chairman Kent Conrad , D-N.D.

Schumer said infrastructure investment and a second round of rebate checks could be part of the new package, which Democrats are likely to unveil after the July Fourth recess.

Schumer is apparently unconcerned or unaware that state government spending is a key prop holding up the economy during a recession. As the NYT pointed out earlier this week:

At $1.8 trillion annually in a $14 trillion economy, the states and municipalities spend almost twice as much as the federal government, including the cost of the Iraq war. When librarians, lifeguards, teachers, transit workers, road repair crews and health care workers disappear, or airport and school construction is halted, the economy trembles.

Tags: barack obama, recession, state budgets, Chuck Schumer (all tags)

CQ Politics is reporting that some key pieces of the fiscal relief package that Obama proposed have already been dropped from the plans of Congressional leadership: Democrats have been contemplating a second effort to inject money this year into the faltering economy. The idea appears to have gained traction, particularly among congressional leaders, since Monday when presumptive Democratic presidential nominee Sen. Barack Obama of Illinois outlined a $50 billion stimulus proposal that will serve as the centerpiece of a two-week economic tour ... Read More

Jun 11, 20080

House GOP’s Bold Economic Agenda

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House Republicans will unveil their economic agenda tomorrow with proposals to end earmarks, simplify the tax code and increase energy production. The GOP’s agenda should excite conservatives, who will recognize many of the policy goals as long-sought objectives.

For the past 18 months in the minority, Republicans have struggled to unify around a specific set of policy goals. Their economic agenda comes one month after they promoted an “American Families Agenda.” Two other policy plans will be unveiled in the coming months.

The centerpiece of the economic agenda is spending and tax reform. The proposal calls for an “immediate moratorium on congressional earmarks,” which constitutes remarkable progress for House Republicans. The GOP was unable to arrive at that goal earlier this year following its retreat. But after pressure from Republican Study Committee Chairman Jeb Hensarling (R-Tex.), conservatives apparently won over Boehner, who has long opposed pork-barrel projects.

On tax reform, Republicans are proposing a “two-tier flat tax system that can be filed on one page,” a bold move that moves beyond tinkering with the existing tax code. While it certainly won’t satisfy FairTax supporters, it differs drastically from anything Democrats have proposed. Americans will be dealt the largest tax increase in history if liberals have their way in Congress.

Other goals that are noteworthy include:

• Passing entitlement reform that addresses the problems facing Social Security, Medicare and Medicaid.
• Balancing the federal budget by 2012 without raising taxes.
• Prohibiting federal spending from growing faster than the economy.
• Extending the current welfare work requirements to food stamps and housing.
• Making portability a central component of health care reform.

Here are complete details of the economic agenda:

1. A REPUBLICAN MAJORITY WILL LOWER GAS PRICES

  • We’ll lower gas prices by increasing supply, expanding environmentally sound production of American energy, promoting new technologies to deliver new, cleaner energy and provide incentives to increase our energy efficiency – implementing energy reforms long delayed at America’s expense by short-sighted Democratic politicians.

2. A REPUBLICAN MAJORITY WILL CUT THE PORK

  • We will restore fiscal responsibility in Washington by reining in spending, passing meaningful entitlement reform and balancing the federal budget by 2012 without raising taxes.
  • We will enact an immediate moratorium on congressional earmarks and establish a bipartisan panel to fundamentally reform how Washington spends taxpayer dollars.
  • We will reduce the size of government, make it more efficient and transparent while eliminating eliminate duplicative or wasteful programs.
  • We will limit the growth of federal spending to a level families can afford by adopting a spending limit that would prohibit federal spending from growing faster than the economy except in time of war or national emergency.
  • We will eliminate the exclusive tax breaks Democrats have given rich trial lawyers, and enact reforms to stop lawsuit abuse and prevent American jobs from being destroyed by abuse of the legal system.

3. A REPUBLICAN MAJORITY WILL STOP THE DEMOCRATIC TAX HIKE

  • We will stop the largest tax increase in American history on workers, parents, married couples, small businesses, and those saving for retirement. We will offer new tax breaks for Americans – including eliminating the unfair Alternative Minimum Tax and making the Internet permanently tax-free.
  • We will end a tax code that is too long, too complex and too unfair by providing individuals an alternative, two-tier flat tax system that can be filed on one page. Taxpayers can choose the new, simplified system or stay with the current tax code—whichever option suits them.
  • We will make the tax code more family-friendly by reforming the child tax credit and lowering taxes on retirement benefits.

4. A REPUBLICAN MAJORITY WILL FIX A BROKEN WASHINGTON TO SUPPORT LONG-TERM ECONOMIC GROWTH

  • To encourage a welfare safety net that fosters marriage and work, we will extend many of the current welfare work requirements to other programs – namely food stamps and housing – so that those who are not old, young, or disabled are either working in the private sector or serving in their community.
  • We will strengthen education by supporting increased state and local control and flexibility, increasing parental options through school choice, and encouraging states to provide extra support for good teachers through teacher performance pay initiatives.
  • We will tear down barriers that prevent U.S. products from being sold abroad. We will reject policies that retreat from world trade and segregate America from the rest of the world, in favor of policies that level the playing field for American employees and employers and give our workers the ability to go toe-to-toe with workers overseas.
  • We will level the playing field for American workers and start importing jobs here by cutting taxes on American industry.
  • We will strengthen homeownership in America through a series of reforms that encourage home purchases and help needy homeowners who are truly victims.
  • We will reform and improve our current health care system. The House GOP health care reform agenda, to be unveiled in detail in the coming weeks, will include reforms that will help small businesses deal with skyrocketing health care costs and help patients by broadening the array of health insurance choices available to them by allowing them to purchase health plans available in other states.

House Republicans will unveil their economic agenda tomorrow with proposals to end earmarks, simplify the tax code and increase energy production. The GOP's agenda should excite conservatives, who will recognize many of the policy goals as long-sought objectives. For the past 18 months in the minority, Republicans have struggled to unify around a specific set of policy goals. Their economic agenda comes one month after they promoted an "American ... Read More

Jun 11, 20080

McCain Claims Lack Of Economics Knowledge Comments Were Taken ‘Out Of Context’

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During an interview yesterday, Fox News’s Carl Cameron asked Sen. John McCain (R-AZ) if it was a “mistake” for McCain to say he knows little about the economy. But McCain denied that he had made any such suggestion, arguing that his past comments were taken “out of context”:
CAMERON: Realistically, was it a mistake […]

During an interview yesterday, Fox News’s Carl Cameron asked Sen. John McCain (R-AZ) if it was a “mistake” for McCain to say he knows little about the economy. But McCain denied that he had made any such suggestion, arguing that his past comments were taken “out of context”: CAMERON: Realistically, was it a mistake for you to suggest that overall your attentiveness to the economy is subordinated by national security? MCCAIN: As briefly as possible, when you’re on the back of ... Read More

Jun 11, 20080

No Obama-Strickland Ticket

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Well, cross off Ohio Gov. Ted Strickland from Obama’s potential VP list, as he has ruled out running in the most unambiguous terms. For a variety of reasons, I always thought he was an unlikely pick. Strickland on Obama’s chances in Ohio:

When asked to rank the degree of difficulty of Obama carrying Ohio, Strickland says: “I would say somewhere around 5 in a scale of 1 to 10. I think it’s, I just think it’s a challenge because of the nature of our state.”

Ohio as a true tossup sounds about right at this stage. As in Virginia, the Ohio GOP has made a terrible mess of its own house, and that combined with the perenially weak Ohio economy has given Democrats an opportunity in the state. But McCain’s relatively popular in Ohio, and Obama got crushed there in the primaries. Much will turn on turnout, as the polls consistently show a McCain lead among likely voters, but a strong Obama position in polls of all registered voters. (One wild card: Bush won an unusually high proportion of African-American voters in Ohio in 2004 - 16% compared to 9% in 2000 - due perhaps to the same-sex marriage ballot initiative and the support of Ken Blackwell; that won’t happen against Obama).

Well, cross off Ohio Gov. Ted Strickland from Obama's potential VP list, as he has ruled out running in the most unambiguous terms. For a variety of reasons, I always thought he was an unlikely pick. Strickland on Obama's chances in Ohio: When asked to rank the degree of difficulty of Obama carrying Ohio, Strickland says: "I would say somewhere around 5 in a scale of 1 ... Read More

Jun 10, 20080

Top McCain Adviser Blatantly Lies About Obama’s Tax Proposals: ‘He’s Not Proposed One Single Tax Cut’

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On Fox News today, Carly Fiorina, who is a top economic adviser to Sen. John McCain (R-AZ), blatantly distorted Sen. Barack Obama’s (D-IL) tax proposals. When Fox’s Martha MacCallum noted that Obama says he wants to “put money back in people’s pockets and give them tax cuts,” Fiorina claimed that Obama has “not proposed one […]

On Fox News today, Carly Fiorina, who is a top economic adviser to Sen. John McCain (R-AZ), blatantly distorted Sen. Barack Obama’s (D-IL) tax proposals. When Fox’s Martha MacCallum noted that Obama says he wants to “put money back in people’s pockets and give them tax cuts,” Fiorina claimed that Obama has “not proposed one single tax cut”: FIORINA: Yes, but he’s not proposed one single tax cut. In fact, every program he’s proposed is a tax increase, whether it’s an increase in ... Read More

Jun 10, 20080

Convince Me

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I had some fun yesterday, kicking over the anthill that is the Obama cult, and my, how the little critters are still furious about it. This is one reason I can’t be a Democrat; the people in that party appear for the most part to be driven only by emotion. Sure, it makes sense to care about the issues and your candidate of choice, but there really should be rational, logical reasons for your positions. And frankly, the Left seems to hate the very idea of defending its positions with logic and evidence. Take Global Warming, for instance. I agree that we humans must be responsible for the materials we use, and to be accountable for the effect our actions have on other people and living things. But accepting radical demands simply because they are couched in the ‘we can’t wait to prove our case’ arguments of Global Warming advocates is not rational, especially when there is reason to suspect hidden agenda and ulterior motives. Global Warming is an unproven theory, to say nothing of the claims that man’s actions cause it or can stop it. The Kyoto Treaty stands out as a particularly deceitful and hypocritical example of the thinking, punishing the US while excusing, even rewarding third-world nations and places like China, whose actions are - using the logic of the Left - far more contributory to pollution and Global Warming. A reasonable person could well wonder why we should even be concerned with Carbon Dioxide, known to be beneficial to most plants and inert to humans except in levels on concentration impossible to find in Nature, especially when we could and to my mind should focus on real pollution from particulates and known carcinogens. And that is merely one of the more obvious examples.

Economics is another arena where Leftist demands run into brick walls of Reality. Take the recent hike in the minimum wage, an artificial creation of Congress which does nothing to increase the economy’s effectiveness, but is merely another mechanism for wealth redistribution. The money to pay for the increased minimum comes from the businesses which pay employees, businesses which for the most part are sole proprietorships or small partnerships, that is businesses already running on tight margins which cannot afford to have their expenses increased simply because Congress wanted to do so. So they did what they had to do, they cut positions to make ends meet and this raised the unemployment rate. This is the same logic that adding a half-dollar tax on your gas would be a good idea, but if you look on the side of the pump the next time you fill up, you will see that the government thought that was a great idea, as well. The Left does not understand Economics, and certainly never considers the law of unintended consequences.

- continued -

This brings us back to the Left’s poster boy for President; a guy whose experience is so thin that he barely got started in his first year as a Senator before he started running for President. A guy who boasted about his superior judgment, but who has had to admit that he did not really understand the character and nature of some of his closest associates. His mentor, Jeremiah Wright, has been exposed as an America-hating racist, yet Obama called this man his mentor and his closest advisor for years. Obama was a close acquaintance of Billy Ayers, even declared his candidacy from Ayer’s house, but now it turns out that Ayers was not only a member of the infamous ‘Weatherman’ terrorist group in the 1960s, he still holds the same values he did then. We find that Obama made deals with his fund-raiser Antoin Rezko, at least before Mr. Rezko got himself indicted and convicted for fraud and corruption. The list goes on much further, but you get the idea … Obama’s associates were and are as dirty as those we once saw surrounding Richard Nixon. Different party, but the same game.

So, convince me guys. What is the rational argument for electing Obama? What empirical support can you point to, that shows he can do the job and is fit for it?

Is there anything inside that expensive suit but a con man?

I had some fun yesterday, kicking over the anthill that is the Obama cult, and my, how the little critters are still furious about it. This is one reason I can't be a Democrat; the people in that party appear for the most part to be driven only by emotion. Sure, it makes sense to care about the issues and your candidate of choice, but there really should be rational, logical reasons for your positions. And frankly, the Left ... Read More

Jun 10, 20080

I Love You, You’re Perfect, Now Change

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Over at Politico in a post titled “No populist he,” Ben Smith prints a partial transcript of an interview Obama did with CNBC set to air tonight:

HARWOOD: On your general approach to business, you have criticized trade deals as not in the interests of American workers. You’ve talked about Wall Street speculators tricking people out of their homes, you’ve hit corporations for outsourcing. Are you a populist, and do you have any concern that your agenda might end up doing some damage to a US and global economic system that, though it’s struggling now, has delivered a lot of benefits to a lot of people over the last 25 years?

Sen. OBAMA: Look. I am a pro-growth, free market guy. I love the market. I think it is the best invention to allocate resources and produce enormous prosperity for America or the world that’s ever been designed.

Smith says Obama “puts his love for the free market in terms that we didn’t hear in Ohio,” but he’s missing the point. Obama quickly pivots:

As I said before, I think what’s happened is that the market has gotten out of balance. This isn’t the first time it happened. It happens often, particularly during periods of great technological and economic change. It happened, you know, when we moved from farms to factories. It happened when we shifted from factories to the information age. We’re still in the process of adapting to this new environment. And there are those of us who have done very well in this new global economy. A lot of dislocations have taken place. And all I’ve said is let’s make sure that our economy takes into account not just the winners but also the losers in the economy.

Let’s make sure that the burdens and benefits of globalization are fairly distributed. Let’s make sure that we are investing in what’s required for long-term growth. And I don’t think there’s any market advocate who would suggest that if our schools are underperforming, if our investment in basic science and research is declining, if young people can’t afford to go to college, if our health-care system is broken and more expensive delivering less in terms of quality care than any other advanced nation, that those are good things for the market, then, you know, we should go ahead and make those investments, make those changes, to make this marketplace work better. That’s my basic philosophy.

Obama doesn’t use rhetorical sledgehammers often, so the key is reading the layers of what he’s saying (especially considering the specific outlet). Obama first sets down a premise that, in theory, markets are the best system to produce and distribute prosperity. But then nearly everything he says after that points to work that must be done to fix failures and make the economy work for people again.

The unstated premise is that our markets have been hijacked to distribute resources to only a very small segment of our population at the expense of everyone else. Obama’s language is not as partisan or blunt as some would like (and this example is particularly subtle), but there’s no mistaking his meaning.

Tags: Barack Obama, Election 08 (all tags)

Over at Politico in a post titled "No populist he," Ben Smith prints a partial transcript of an interview Obama did with CNBC set to air tonight: HARWOOD: On your general approach to business, you have criticized trade deals as not in the interests of American workers. You've talked about Wall Street speculators tricking people out of their homes, you've hit corporations for outsourcing. Are you a populist, and do you have any concern that your agenda might end up doing ... Read More

Jun 10, 20080

McCain Adviser: McCain Opposes ‘Reckless Favors For Oil Companies,’ Will Eliminate ‘All Special Tax Breaks’

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In a conference call yesterday, Sen. John McCain’s (R-AZ) top economic adviser, Douglas Holtz-Eakin, said McCain voted against the 2005 Energy Policy Act because it contained massive tax breaks to big oil companies. McCain’s economic plan, Holtz-Eakin claimed, would eliminate “all special tax breaks” to these oil companies, who are currently enjoying record profits:

It […]

In a conference call yesterday, Sen. John McCain’s (R-AZ) top economic adviser, Douglas Holtz-Eakin, said McCain voted against the 2005 Energy Policy Act because it contained massive tax breaks to big oil companies. McCain’s economic plan, Holtz-Eakin claimed, would eliminate “all special tax breaks” to these oil companies, who are currently enjoying record profits: It was full of reckless favors for oil companies. Senator McCain has proposed eliminating all special tax breaks for oil companies and understands that in an economy where ... Read More

Jun 10, 20080

Obama Hoisted Upon His Own Petard

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On the campaign trail Obama has railed against Countrywide Financial Corp. and its executives — blaming the firm for “infecting the economy and helping to create a home foreclosure crisis”:

That was then. Today, ABC News’ Sunlen Miller caught Obama away from his remote controller teleprompter, and asked him how he could “rail against Countrywide Financial Corp. as an example of insiders and today’s economy while your VP search is headed by someone who got questionable loans from Countrywide?”

Obama didn’t know how to respond:

“Well, look,” Obama said, “the, the, I mean - first of all I am not vetting my VP search committee for their mortgages, so you’re gong to have to direct — “

“But shouldn’t you?” asked Miller.

“Well, no,” Obama said. “It becomes sort of a, um, I mean, this is a game that can be played - everybody, you know, who is tangentially related to our campaign, I think, is going to have a whole host of relationships — I would have to hire the vetter to vet the vetters. I mean, at some point, you know, we just asked people to do their assignments.

Read on, there is more.

Here, its easier to just watch watch Obama try to double talk his way out of his hypocrisy:

On the campaign trail Obama has railed against Countrywide Financial Corp. and its executives -- blaming the firm for "infecting the economy and helping to create a home foreclosure crisis": That was then. Today, ABC News' Sunlen Miller caught Obama away from his remote controller teleprompter, and asked him how he could "rail against Countrywide Financial Corp. as an example of insiders and today's economy while your VP search ... Read More

Jun 10, 20080

Market Mover: Dealing With Higher US Inflation

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A funny thing happened this morning as I was writing a story for you about Timothy Geithner’s important speech yesterday at the New York Economic Club: Inflation came back.

Geithner is the President of the New York Federal Reserve Bank, and his main topic yesterday was the gap between today’s innovative financial-market practices and the regulatory apparatus (including the Fed) that is supposed to keep markets stable.

This is a critical topic of great interest to policymakers around the world, and a consensus is growing that a “unified global framework” for financial regulation is needed. I’ll write a complete post about this subject later on.

But in the Q/A after his speech, President Geithner was asked (inevitably) about where the economy is going. He said that demand is getting softer, but he also said that the Fed will be watching inflation very carefully.

Federal Reserve officials always tread a very fine line in public statements because they know everyone will parse every comma for signals about the direction of interest rates. By emphasizing inflation over economic slowness, Geithner left an impression that they might head higher.

Keep reading…

As I’ve told you, the Europeans already signaled higher interest rates last week. Elliptical remarks by European Central Bank Governor Jean-Claude Trichet on Thursday were the trigger for a big wave of dollar-selling and crude-oil buying. This was why oil prices hit $139 on Friday.

So what happened next was that Fed Chairman Bernanke piled on last night with a statement that he sees considerably less risk of an economic slowdown, but will aggressively meet any signs of increasing inflation in the US.

The whole time that Bernanke and his colleagues have been slashing policy interest rates since last September, they’ve always been very clear that they would reverse quickly if they caught the smell of inflation. Most of us expected rates to stay steady for the rest of this year. So if there is an early change to tighter monetary policy, it’s a surprise.

Markets have reacted strongly to this decided shift in the regulatory tone. Bond markets are steeply lower this morning, the dollar has rallied against both the yen and the euro (up from 1.57 to 1.55), and crude oil continues its retreat, trading this morning around $134.40.

What’s missing from the picture is any clarity on whether the Fed’s economy-watchers are actually seeing a return to stronger conditions. The other possibility is that they’re trying to walk back some of the inflationary impact of the extraordinary actions they took in the wake of the Bear Stearns collapse and the severe money-market disruptions that occurred in March and April. This is a question I’d ask Bernanke and Geithner if given the chance.

If we start moving to higher interest rates while the economy is still weak, it could prolong the weakness. But as I’ve said many times, this recession is different because it’s being driven primarily by weak credit formation. If we can address this problem (which actually is tied in deeply with the housing markets), then economic conditions should improve.

Watch this space. I’ll update the story as needed.

Oh, and as an aside: Here’s a question that I don’t see anyone in Congress asking: why is it that prices of crude oil have become so dependent on monetary policy and financial markets? Oil is supposed to be an industrial commodity, not a financial instrument, right? Well, no, that’s obviously not all it is. We do a lot of bloviating about drilling ANWR and building more refineries (and Barack Obama keeps chattering like a wind-up doll about windfall profits taxes), but the influences on oil prices are far more complex than many people appreciate. And therefore, their political impact is too.

-Francis Cianfrocca (“blackhedd”)

A funny thing happened this morning as I was writing a story for you about Timothy Geithner’s important speech yesterday at the New York Economic Club: Inflation came back. Geithner is the President of the New York Federal Reserve Bank, and his main topic yesterday was the gap between today’s innovative financial-market practices and the regulatory apparatus (including the Fed) that is supposed to keep markets stable. This is a ... Read More