Felix Salmon

Paywalls and cannibalization

Felix Salmon
Jan 31, 2011 23:09 UTC

I’m surprised, but pleased, to see this coming from FT editor Lionel Barber, in his Hugh Cudlipp lecture today:

For those publications adopting pay walls, the strategy represents a big leap into uncharted territory. Those which remain free or substantially free, have another kind of hope: that the very large audiences they are able to garner through freely available content will boost sales – or at least slow the decline of the print edition.

This is the first time that I’ve seen an advocate of online paywalls admit that they don’t boost offline subscriptions, and that newspapers which give their content away for free online have every hope that doing so will result in increased print sales.

This makes conceptual sense, of course: the paper you choose to buy at the newsstand is likely to be the same one you read every day online, so boosting the latter audience by making or keeping your content free is likely to boost the former audience as well.

Most publishers, however, have not historically thought this way. Turning their solipsism up to 11, they have reasoned that people buy newspaper X because they want newspaper X’s content in particular, and that if readers can find that content online for free, then they won’t subscribe to the paper or buy it on newsstands.

The truth, of course, is that people want news, not newspapers, and they will find a preferred venue for that news both online and in print. Newspapers aren’t competing with their own websites: they’re competing with everybody else’s news websites, not to mention all the other types of media and entertainment out there. That’s why Barber says that he “was pleased to see that the BBC has at last begun to recognize the economic threat that BBC online poses to newspapers” — there’s little point in getting rid of your own free website if there are lots of other free websites out there which can cause your paper just as much harm.

Barber’s speech comes just as fiwords.com launches — a website of financial definitions attached to a book with the same content, co-written by Chris Roush of Talking Biz News. Roush asked me to be on the advisory board of the site, but I started pushing back when it launched with a high and impenetrable paywall.

The site’s content is useful, and the site itself is very well designed, so one would think that the most natural thing in the world would be to make it free. It would rapidly rise to the top of many Google searches, it would become a loved and much-used resource, it would be able to crowdsource help with tricky definitions, and it would be a sought-after advertising venue for many financial-services companies. Instead, Roush and his publisher have put up this paywall, on the grounds, he told me, that “we’ve put all of the content from the book, and more, onto the site, so if we gave it away for free, no one would buy the book“.

That’s silly — and just as solipsistic as those newspaper publishers who fear cannibalizing themselves. If people want to look up financial terms online, they’re going to do so whether or not fiwords.com is free. If it is free, they’ll use it; if it isn’t, they won’t. They’re not going to buy a fiwords.com subscription on the off chance that the definitions there turn out to be substantially better than the definitions elsewhere.

More to the point, they’ll be more likely to buy the book if they regularly get a lot of value out of its content online. The experience of publishers who have put works up for free online is very consistent: print sales go up, not down.

Barber’s point is an interesting one: that putting up a paywall can make sense even in the knowledge that staying free would probably mean a higher print subscription base. Essentially, he says, the FT has made the strategic decision to maximize total subscribers — the loyal readers who come back many times per week or even per day, and who are highly valuable to advertisers. By putting up a paywall, the FT manages to corral, count, and sell such subscribers online, just as it does in print.

But I’d bet that even Barber, the paywall advocate, would be puzzled by the fiwords.com strategy. Both the book and the website are pretty obscure, right now; what they need more than anything else is visibility and a widespread reputation. And they’re not going to get that by putting up a paywall at launch.


I’m surprised that newspapers have not come up with their own version of groupon, something like newpon, and offer their readers great deals.

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Chris Hayes on fractal inequality at Davos

Felix Salmon
Jan 31, 2011 21:28 UTC


“there are so many ways that the typical family earning $80-$100k could save an additional $5k”

Median family income in the US is $51k. Your “typical” family has an income twice as large. If you are so out of touch w the circunstances of actual working people you have no business commenting on how they should go about paying for their kids education.

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The triumph of Davos

Felix Salmon
Jan 30, 2011 09:04 UTC

Davos, in 2011, was the year when the cynics were finally proven wrong. Long derided as a sybaritic alpine gabfest, the World Economic Forum astonished the world with what it was capable of this year, deftly leveraging the talk around its chosen theme — “shared norms for the new reality” — into an effective and timely intervention in Egypt. The Forum’s slogan — “committed to improving the state of the world” — became reality, as the actions of a small and powerful few atop a distant Swiss alp managed to give shape and direction to what would otherwise have remained inchoate and dangerous demonstrations in the volatile North African hotspot.

Certainly the Forum had a lot to work with — it has long been looking long and hard at global risks including political instability in undemocratic countries as well as the demographics of North Africa and the Middle East; the adverse effects of high unemployment among both educated and uneducated youth; the game-changing aspects in autocratic regimes of the rapid spread of information over cellphones, the internet, and satellite TV; and countless other issues of direct relevance to Egypt.

On top of that, as the Egypt crisis evolved over the first few days of the Forum’s annual meeting in Davos, two things rapidly became clear. Firstly, this was an astonishing stroke of good timing: rarely is a major global crisis so fluid and susceptible to outside influence just as the world’s top politicians, businessmen, and thinkers are all in the same place at the same time. Secondly, the work being put in by delegates to define shared norms for the new reality was directly relevant to Egypt, which was clearly in desperate need of shared norms for everybody to agree on as it moves uncomfortably into recognition that it’s now in a new reality.

The result was undoubtedly impressive. All panels and events were reconfigured to concentrate on Egypt and what the delegates at Davos could do to help. The small Swiss village was full of leaders of every stripe — women’s leaders, youth leaders, media leaders, business leaders, and, of course, politicians with direct influence and importance, such as Amre Moussa, the secretary-general of the Arab League. Knowing that swift and focused action was the order of the day, they rapidly put together an action plan. It was both clear enough to persuade Hosni Mubarak that global opinion had turned decisively against him and that his position was no longer tenable, and flexible enough to adapt to rapidly-changing realities in Cairo.

With money from a large number of the Davos rich and communications expertise from broadcast, telecommunications, and social-media representatives, the manifesto put together in the space of just two days at the Congress Center became a clear rallying point not only for Egypt’s disaffected youth but also for their counterparts across the region. And with radical and democratic change now just a matter of timing, Arab countries saw that a peaceful transition to stable democracy was both possible and necessary. The rest is history.

Cynical bloggers had said that even events of Egypt’s magnitude would barely make a dent in the rigid and out-of-touch culture of Davos. The parties and ski trips would continue, they reckoned, the program would remain unchanged, and the handful of delegates interested in Egypt would simply cluster around flat-screen televisions screening Al Jazeera rather than actually doing anything productive. Those bloggers were forced to eat their words.

Did they think that the Forum’s commitment to improving the state of the world was simply a veneer designed to make an astonishingly expensive professional-networking event look vaguely respectable? Of course it wasn’t. We might be in a new reality now, but the leaders of Davos more than ever have the ability and determination to transcend their selfish agendas and unite to effect a major and positive change in the world. The triumph of Davos in 2011 has confirmed the World Economic Forum as an indispensable gathering-point for global leadership for decades to come.


Awesome, Felix. Great satire!

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Building a regulatory architecture for microfinance

Felix Salmon
Jan 28, 2011 19:36 UTC

The best panel I went to at Davos this year—and I got the impression that most of the other people there would say the same thing—was a lunch session today on going “beyond microfinance” when it comes to providing financial services to the unbanked around the world. The implosion of the microfinance sector in Andhra Pradesh has clearly had a sobering effect on much of the well-intentioned professionals here in Davos, and it’s clear that a lot of the hope that surrounded microfinance is now moving on to other things, especially mobile banking.

If there was one big running theme to the lunch, it was that of regulation—a very tough nut to crack. On the one hand, there are lots of organizations devoted to delivering financial services to the poor which are severely hobbled by the regulatory regimes under which they’re working. A big bank CEO at the lunch said that all of his company’s initiatives in the sector essentially had to be ring-fenced from the bank itself, or outsourced entirely to other organizations, for regulatory reasons. The cost of effective anti-money-laudering architecture, he said, is so high per bank account that no account for tiny depositors could ever make economic sense. And at the other end of the size spectrum, a tiny non-profit in Haiti was saying that the regulatory obstacles to providing basic banking services were so high as to be practically insurmountable.

On top of that, many of the success stories in banking the poor, from Grameen in Bangladesh to MPesa in Kenya, grew to be large and highly successful precisely because they had little or no regulatory oversight. And there was an impassioned plea from one speaker that the concerns of banks catering to the poor be an important part of the Basel rules, since so many of those rules are designed for big, rich banks with big, rich clients, and are almost impossible to apply to this very different world.

On the other hand, lack of regulation is the main reason why microcredit, in particular, grew so quickly and out of control, with pretty disastrous outcomes not only in Andhra Pradesh but in many other countries too, from Bosnia to Nicaragua. A profusion of microlenders can easily result in borrowers taking too many loans from too many people, eventually getting far out of their depth, and a lack of regulation can mean usurious interest rates. Far too much commentary on microlending seems to be based on the premise that more lending is ipso facto a good thing, but attempts to demonstrate that empirically have often failed or have generated very unclear results.

Meanwhile, the emphasis on small individual borrowers has meant a certain deficit of attention on small businesses in developing nations, where by some estimates the credit gap is well over $2 trillion. And the amount of money and talent being devoted to setting up lending operations does seem in many cases to have short-changed other, even more important financial services, such as payments, savings, and insurance.

My feeling is that what’s needed here is some kind of platform, or architecture, into which all financial service organizations can plug themselves without being stifled by regulation or needing to bypass or arbitrage it. Lending needs to be regulated more than it is, because although the main victims when a lender collapses are generally its rich shareholders rather than its poor borrowers, the collapse of major lending institutions can cause great damage when it comes to trust in financial-services companies more generally.

Some private-sector initiatives, like Fino, are quite exciting on this front, but they obviously can’t provide much help when it comes to regulation, which is crucial. It needs to exist, across the financial-services spectrum; it needs to be helpful and constructive rather than simply saying no to anything which doesn’t look like a big traditional bank; and it needs to be able to protect end users through deposit insurance and other mechanisms which require full state backing.

This is going to be extremely difficult. Central bankers and other regulators, for many reasons, have very little interest in regulating or licensing mobile-phone operators and other new entrants into the financial-services space. And the existing players in that space, banks foremost among them, have similarly little interest in seeing competitors spring up with lighter regulation. Already they’re at a serious competitive disadvantage: one attendee at the lunch said that a bank employee in India costs $10,000 a year, while a microlending employee costs only $1,000 per year. Given the politics of bank regulation, large existing regulated institutions are likely to be calling the shots when it comes to allowing smaller banks and insurers into the club.

For the time being, then, I fear that microfinance is going to continue to evolve most interestingly and vibrantly in the unregulated space, with all the dangers that naturally means. I hope that a well-thought-through system of microfinance and microinsurance regulation does begin to evolve, but I’m pessimistic, and I suspect that one of the greatest hopes for the educated youth of countries like Egypt and Tunisia—that they will be able to get loans to start companies and develop their economies—will remain out of reach for the foreseeable future.

Wine list of the day, Davos edition

Felix Salmon
Jan 28, 2011 11:04 UTC

The prize for most obnoxious party at Davos was won on the first night, with the Davos Tasting put on by the Wine Forum.

Wine tasting was historically one of the more interesting and enjoyable events that was put on at Davos, but it got nixed in 2009 when conspicuous consumption of first-growth clarets was considered inappropriate in the face of the global financial crisis. The consequence was much the same as attempts to cap CEO salaries: just as the executives end up making much more money through stock options, the wine tasters, freed from whatever decorum was imposed upon them by the official constraints of the World Economic Forum, showed just how out-of-control wine events can really be.

The plutocrats at Davos, of course, both western and eastern, are exactly the kind of people who spend thousands of dollars a bottle on fine wines. But they’re also driven and single-minded executives who naturally gravitate to the obvious and middlebrow in other areas: if they’re buying art, they’ll plump for something shiny by Damien Murakoons (both Hirst and Koons are in Davos this week), while the big-name creative types here are the likes of Jose Carreras, Peter Gabriel, and Paulo Coelho.

Wine here, then, is judged with executives’ eyes rather than their noses. They look at the label first and then at two crucial numbers: the number of points it gets from Robert Parker or Wine Spectator and the cost in dollars. Take that to its logical conclusion and you wind up with exactly what we saw on Wednesday night:

This evening’s wine selection consists of wines that have achieved 100 points or equivalent from one of three well known raters.

The raters, of course, are Robert Parker, Jancis Robinson and the Wine Spectator — the consensus arbiters of mainstream wine taste.

You want the list? OK:

1969 Vega Sicilia, 1980 Vega Sicilia, 1982 Krug, 1982 Pichon Lalande Comptesse du Lalande, 1990 Gaja Barbaresco Sorì Tildìn, 1994 Harlan Estate, 1994 Quinta do Noval Port, 1998 Le Pin, 2000 Bruno Giacosa Barolo Le Rocche del Falletto, 2000 Léoville Las Cases, 2000 Cheval Blanc, 2000 Pavie, 2001 Domaine de la Mordoree Chateauneuf du Pape Cuvee de la Reine des Bois, 2002 Greenock Creek Shiraz Roennfeldt Road, 2004 Le Macchiole Toscana Messorio, 2005 L’Eglise Clinet, 2005 Pavie, 2006 Colgin, 2007 Dana Estate, 2009 Léoville Poyferré.

And that’s not including a few more Champagnes, a 1995 Figeac or the Louis XIII cognac.

The event was held at the semi-legendary Piano Bar of the Hotel Europe, which was fully booked out by the Wine Forum for two and a half extremely expensive hours. The Piano Bar is the late-night haunt of Davos Man and it comes with the permanent tang of stale cigarette smoke and a general culture of heavy drinking.

The result was basically a drunken mess. Revelers would cluster around stations loaded up with fine wine, getting large pours of increasingly-indistinguishable heavy cabernets, competing to find the Cheval Blanc and Le Pin (which were naturally considered the most desirable wines, just because they were the most expensive), all the while fighting off jetlag and concentrating mainly on greeting their old Davos buddies and catching up on gossip. (Update: I forgot to mention that all the wine was served “pop-and-pour” style, where a wine would run out, a waiter would run to get another bottle, would open it, and then immediately start pouring it into various partiers’ glasses. No decanting, no time to breathe, nothing. Maybe the reason I liked the Barolo so much was that it had been sitting open for a while by the time I got to it.)

Most of the wine, including the Cheval Blanc, was far too young to drink — but of course it’s hard to find such names in quantity if you want them older. My favorite, by far, was the Barolo (about $550 a bottle if you want to buy it in Hong Kong), but the event really wasn’t remotely conducive to tasting and appreciating the wines, so much as it was a way of celebrating and appreciating Anthony Scaramucci and Skybridge Capital, who underwrote the event. Scaramucci, a member of the Wine Forum, is the first to admit that he’s not much of a wine connoisseur, but he knew what he wanted: he told me that the bill for the event just kept on rising from its initial stratospheric level, as he insisted that if he was going to throw a party, the wine must never run out and must be available in quantity.

I’m glad that I got the opportunity to taste a bunch of these wines, even though I didn’t really appreciate most of them. Maybe to do that you need to have much more respect for point ratings or dollar prices than I do, or at least believe on a very deep level that they have a strong correlation with quality. I’m pretty certain, at this point, that my taste in wine isn’t Robert Parker’s taste, at least as it is revealed in his ratings. But ultimately events like this aren’t much about taste at all: they’re about putting down markers of various kinds and confirming in the plutocrats’ minds just how exclusive they, and Davos, really are.

Update: Scaramucci calls to say that I’m a “dork” for writing this, says that I’m an embarrassment to my profession, and argues that it was malicious and unfair of me to accept an invitation to his party, only to turn around in public and call it (and, by implication, him) obnoxious. He’s upset, which is understandable, and I very much doubt I’ll be invited to any more of his events. I’ll say here what I told him on the phone, which is that this post was not written maliciously, and that I bear no animus to him personally — I didn’t talk to him for long at the event, but he was very cordial to me and I liked him. I felt his party was so emblematic of Davos in so many ways that I had to blog it. But I’m sorry that he ended up being singled out; my point was very much about the culture of Davos more generally.

Update 2: I watched Wall Street 2 on the flight back to New York (don’t bother, really), and noted a huge Skybridge logo in a charity-ball scene. Oliver Stone has said that the product placement helped him enormously in financing the movie.


Wait until these attendees find out that there is gambling in the back room of Rick’s Cafe Americain — the rush will be on to see and be seen — Nothing new for Davos Man (or Roman Man). Perhaps not so much a “yawn” as an affirmation.

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Nick Clegg’s inaccessible press event

Felix Salmon
Jan 27, 2011 16:53 UTC

One of the big changes to the ecology of the Davos conference center this year, after its $37 million revamp, is that there’s now a whole level at the top which is off-limits to the working press and accessible only to fully-fledged delegates with coveted white cards. There are a couple of conference rooms up there — called Aspen 1 and Aspen 2 — which is normally no big deal, given that the working press isn’t allowed in to conference sessions anyway.

One thing which hasn’t changed, however, is the way in which everybody bumps into everybody else in the conference center. Which is fine, just so long as you’re not deliberately keeping a very low profile and trying to avoid the press. Like Nick Clegg, for instance, with his 7% approval rating.

And so today we have a rather hilarious double oxymoron. Nick Clegg is having a press event, where he’ll be talking to Arthur Sulzberger; the email invite says that “sign-up is required as there are a limited number of seats available.” That makes sense, given how everybody’s wanting to talk to him right now. But then we’re told that “the session is off-the-record,” which is always disappointing, for a press event. And then we learn that it’s in Aspen 1 — it’s been deliberately put in one of the two rooms which the working press can’t get close to.

I won’t be reporting from the off-the-record press event which is closed to the working press, obviously. But it’ll be interesting to see how many people manage to get past the various hurdles to show up at all.

Update: About 36, by my count. And here’s a link to a  more up-to-date Reuters poll.


no inducement is required to get Tom Friedman to not act like a journalist

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The negative-sum new reality

Felix Salmon
Jan 27, 2011 09:45 UTC

Remember those off-the record comments by “top executives from Goldman Sachs and Standard Chartered” which indicated that the era of contrition had come to an end? Well, they’re on the record now, splashed all over the front page of this morning’s FT. Goldman’s Gary Cohn is coming out swinging, saying that the real danger to the global economy is now posed by unregulated non-banks, while Peter Sands of Standard Chartered reckons that most bank regulations will no more prevent another crisis than seatbelts on airplanes will prevent a plane crash.

It’s true that bankers are not contrite these days: Bob Diamond is standing tall in the halls of Davos, seemingly emboldened by his performance in front of the UK parliament, at which he said that “there was a period of remorse and apology for banks and I think that period needs to be over”.

Looking at the bankers as just one of the many species of plutocrats and power brokers in Davos, it seems to me that they’re taking full advantage of their present profitability (thanks, Mr Bernanke) to consolidate their position as much as possible in a world which is evolving in a fast and unpredictable manner.

Nouriel Roubini had a nice little soundbite yesterday, which I think touches on something important:

“There is complete disagreement and disarray. That’s the sense of the G Zero,” Mr Roubini said, explaining the new buzzword at the World Economic Forum’s annual conference in the Swiss resort of Davos.

“There is no agreement on anything. We are in a world where there is no leadership,” he added.

This is bearish, yes, but it’s also descriptive of an every-man-for-himself kind of world. There’s a good number of heads of state floating around, but many of them seem more interested in selling their countries as a great place to do business — just see Dmitry Medvedev’s opening address last night — than in trying to put together any kind of grand international coalition which could bring a measure of predictability or stability to a world filled with massive risks.

In that kind of world, it makes no sense for bankers to stay on the back foot or to try to work constructively on building what the World Economic Forum calls “shared norms for the new reality”. There’s been general puzzlement in Davos as to what that slogan is meant to mean and I was of the opinion, up to yesterday, that it was simply empty pablum. But I’ve changed my mind a bit, now, and I think that the WEF is, in its own weak and powerless way, making a desperate and doomed attempt to recreate the sense of global purpose that reached its high point at the G20 meeting in London in 2009.

The problem is that there’s a huge difference between a real global crisis, on the one hand, and a parade of theoretical risks, on the other. The former can concentrate minds and get people pulling in the same direction; the latter can’t. So instead we’ve got thousands of people, in Davos and around the world, all making tactical maneuvers and trying to position themselves as advantageously as possible in relation to everybody else. It’s a negative-sum game which will all end in tears, but I fear that if there really is a “new reality”,  it will turn out to be one marked by destructive power struggles rather than constructive strategic cooperation.

Update: Ian Bremmer tells me that G-zero is his big idea; I’m perfectly happy to give him the credit for it.


In my opinion, the greatest economic failure of the last few years is the framing of issues as “us vs. them” rather than looking for win-win solutions to problems that affect us all. Too many carrots and sticks, too little bread and butter.

Economics works best when it isn’t coerced.

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The WSJ joins forces with short-seller demonizers

Felix Salmon
Jan 26, 2011 17:23 UTC

Back in October, Mike Elk dug into the weird way in which various well-regarded liberal activists, including Tom Matzzie, Lanny Davis, and CREW, were suddenly campaigning aggressively alongside the for-profit education industry. Unsurprisingly, there was money involved, and a lot of it seems to have flowed from John Sperling, the chair of the Apollo Group, which owns the University of Phoenix, and is a major funder of progressive organizations.

Tim Fernholz followed up with some very pointed questions for CREW in particular, which had been aggressively filing FOIA requests seemingly aimed at revealing what everybody already knew, which is that hedge fund managers who were short the for-profit education sector had been talking to the government about what they had discovered:

Here are important questions that CREW has refused to answer:

* Is the for-profit higher education industry, including John Sperling, funding their organization?

* Why have they gotten involved in this specific regulatory dispute and no others?

* Why did they not consult experts on education policy or short-selling before complaining to the Senate and filing FOIA requests?

* What are the connections between CREW Executive Director Melanie Sloan and Julian Epstein, president of the LawMedia Group, a lobbying firm specializing in astroturfing that is working on behalf of for-profit colleges?

Now, the results of the FOIA requests have been made available to the WSJ, which devotes three bylines and 2,000 words to their entirely un-newsworthy contents. What the WSJ doesn’t do is even attempt to ask any of Fernholz’s questions, let alone answer them. CREW is presented as an entirely unconflicted organization:

A group called Citizens for Responsibility and Ethics in Washington, or CREW, wrote to Education Secretary Arne Duncan last week that “certain hedge fund managers had direct and sustained input into the regulatory process.”

In what the group called “more troubling,” it said Education Department officials sought and received investors’ input despite knowing their financial motives, and asked for an investigation…

Investors were on the scene as well. Their efforts are revealed in large caches of documents and emails reviewed by the Journal, many of which surfaced as a result of a freedom-of-information suits filed by CREW, the Washington watchdog, and of legal action by a Florida for-profit college.

One investor, a New York firm called Quilcap Corp., sent a research article to an Education Department official, the emails show.

It goes on from there — but the fact that the WSJ’s list of revelations is topped by an emailed research article says all that you need to know. The only reason the WSJ is covering this story at all seems to be that the information was not public before — but just because something was secret doesn’t make it newsworthy.

The fact that the WSJ is covering a non-story is no big deal. Much worse is the fact that the real story — the corruption of liberal organizations — was right under their nose, and sitting in plain sight in any Google search, yet they completely ignored it. It seems that even the WSJ is much happier gratuitously participating in the demonization of short-sellers than in impartial coverage of the debate over for-profit colleges.

Update: I’m told this story was being shopped around various media outlets by Lanny Davis, who has very close connections to CREW, and who represents the Coalition for Education Success, a trade association of for-profit colleges. If the story did indeed come from Davis, which seems likely, there should have been a lot more disclosure.


Oh, by the way, outstanding post on CREW, conflict of interests, and their FOIA requests.

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Obama’s fiscal weak tea

Felix Salmon
Jan 26, 2011 10:48 UTC

The good news about the State of the Union Address is the same as the bad news: there was really nothing substantive there when it comes to fiscal policy.

In a 6,849-word speech, Barack Obama started talking about fiscal policy 4,049 words in — and then spent 668 words on the subject. That’s less than 10% of the total speech, buried deep into what a magazine editor might call the “back of the book”.

There were a lot of expectations, in the run-up to this SOTU, that Obama would present some really substantive proposals on the fiscal front. But it was not to be. There was a very vague hand-wave on the tax front — both corporate and individual taxes should be “simplified”, he said, without giving any details on the kind of loopholes that he wanted to eradicate. (Mortgage interest tax deduction? We can but hope.)

There were no proposals for tax hikes at all, despite the fact that any good-faith attempt to tackle the budget deficit will simply have to raise the tax base. And the spending-cut proposals were pretty weak tea too: the only ones with numbers attached were a spending freeze designed to save $40 billion a year over the next ten years and “tens of billions of dollars” in defense spending. Given America’s trillion-dollar deficits, this kind of thing barely makes a dent.

Obama did address the big elephant of spending — entitlements — but in a very vague way, including this cryptic passage:

To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations. And we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.

The only way of doing this, I think, is to raise the Social Security tax somehow, perhaps by raising or abolishing the cap on income it’s applied to. But if that’s what Obama meant, the fact that he couldn’t bring himself to say it is dispiriting, and suggests to me that nothing is going to happen in reality.

All that said, however, I do feel that the relatively minor place that fiscal policy had in SOTU is entirely appropriate. I would have liked to see more concrete proposals, but I don’t think that fiscal policy is or should be the top priority for the administration right now. I’m a financial journalist, so it’s something I naturally focus on. But the president has a much bigger job. And with the financial-reform bill now passed, along with two big stimulus bills, it’s time for him to concentrate on other priorities too. Fiscal policy is important, but reducing unemployment is much more so.


Tch tch Nichols7, why are you still reading what I write? You really are amusing, but entirely off topic. My answer to most of the above is yes, although my magical powers are limited,

Back on topic: I am looking through my magical looking glass and see you enjoying Michelle Bachmann’s rebuttal. Ahhhh that says a lot! Can you tell me what she meant by her reference to 21 generations? Was it cryptic?

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