Gregg Easterbrook

Bernanke raises the curtain on the Federal Reserve

Apr 27, 2011 19:40 UTC

Only the Pope guest-hosting Saturday Night Live could top, in public-relations terms, what just happened in Washington — Fed Chairman Ben Bernanke gave a press conference, the first time a Fed chair has stood before reporters to take questions. And maybe Benedict XVI should film an Internet intro to St. Peter’s, since Bernanke just posted an intro to the Vatican of money.

And what a press conference! It began exactly on time. The mood was sedate, the questions softly spoken and polite. Bernanke didn’t take the bait when a reporter asked what he thought of “many economists” calling Fed policy ineffective; there was no snarky follow-up. Recent presidents could only dream of presiding over such a respectful press conference.

Traditionally, Fed chairs have spoken in public only to read a prepared speech — often, cloaked in mumbo-jumbo — or to present congressional testimony. Fed chairmen’s appearances before congressional committees have tended to be dominated by representatives and senators who want to hold the floor, and the cameras’ attention, as they engage in long-winded self-flattery. Sharp, concise questions of the sort asked by reporters are rare in congressional hearings.

Otherwise, Fed chairmen have cultivated an aura of secrecy, so much so that William Grieder’s 1989 book about the Fed was titled, “Secrets of the Temple“. Some believe that Fed chairmen cultivate a secretive air in order to mystify themselves; or because a high-and-mighty atmosphere helps the Fed function properly; or because they fear slipping up and revealing that they are not the super-ultra geniuses they’d like us to believe.

Now Bernanke is raising some of the curtain. Maybe he simply believes the Fed should be more accountable to the public — if so, more power to him. Asked today about ambiguity in Fed pronouncements, Bernanke replied, “the reason we use vague terminology is that we don’t know” what will happen next in the economy. He followed up later by saying he simply doesn’t know when “tightening” will occur because he doesn’t know what course the economy will take. He said “everybody who reads the newspapers” knows about the same information the Fed knows. This is admirable honesty from an institution with a tradition of pretending to be oracular.

Why Obama should pay more in taxes

Apr 20, 2011 13:44 UTC

President Barack Obama wants to increase taxes on the wealthy, and surely is correct that this must be part of any serious plan to control the national debt. Consider the case of a wealthy couple who made $1.7 million in 2010, yet paid only 26.2 percent in federal income taxes — though the top rate supposedly is 35 percent, and the president says that figure should rise to 39.6 percent. The well-off couple in question is Barack and Michelle Obama, whose tax returns, just released, show they paid substantially less than the president says others should pay.

If Obama is in earnest about wanting increased taxes on the wealthy, then he should send the United States Treasury $182,998. That’s the difference between his Form 1040 Line 60 (“This is your total tax”) and what he would have owed at the higher rate (plus limits on itemized deductions) he himself advocates.

So why doesn’t he tax himself more? The Form 1040, after all, only stipulates the minimum tax an American must pay. More is always welcome. Obama should write a check to the United States Treasury for $182,998.

One way to help the national debt: a carbon tax

Apr 13, 2011 19:52 UTC

The budget compromise that averted a federal government shutdown nearly foundered upon the rocks of Republican riders, one of which would have stripped the Environmental Protection Agency of authority to regulate greenhouse gases. Speaking as someone who favors greenhouse restrictions, I wish the Republican rider — dropped just before the clock struck midnight — had succeeded.

The EPA is trying to restrict greenhouse gases using a 41-year-old statute intended for another purpose. Republicans are right to object to this.

Of course, most Republicans don’t want any greenhouse gas regulation at all — though greenhouse regulation is now justified by a strong body of science, including by statements from George W. Bush’s Climate Change Science Program. Greenhouse regulation probably will not cost anywhere near as much as current estimates. All previous programs to control air emissions have proven significantly cheaper than expected. Republicans are correct, though, that the EPA is going about this in the wrong way.

The decline of incumbency and the rise of third-party spoilers

Apr 4, 2011 19:57 UTC


U.S. forces are fighting three costly, inconclusive wars; unemployment is 8.8 percent and the president’s new budget proposal would double the national debt in a mere 10 years. What a great moment for Barack Obama to declare for reelection.

Obama enters the 2012 race as the clear favorite. His poll numbers are weak but his public respect is solid; his money position is outstanding; even people like me, who think runaway federal borrowing is an error of historic proportions, admire the president. I can see myself pulling the lever for him in 2012, as I did in 2008.

Set aside zip code analysis and Electoral College positioning — what two leading indicators should give Obama pause? The decline of incumbency and the rise of third-party spoilers.