James Pethokoukis

Politics and policy from inside Washington

A AAA excuse for Obama tax hikes?

May 26, 2009 17:16 UTC

Brian Wesbury and Bob Stein of First Trust Advisors raise an interesting conjecture (bold is mine):

Back during the budget showdown of 1995, when President Clinton faced off against the new Republican Congress, then-Treasury Secretary Robert Rubin repeatedly warned that the rating agencies could put the US on review for failing to increase the debt limit. The political angle was that a review would jack up interest rates, leading the Republicans to capitulate on trying to reduce government spending. The markets, however, scoffed at Rubin, and interest rates fell during the budget “crisis.”

This time around, we wonder whether in the next couple of years President Obama will declare a fiscal emergency that only a tax hike can solve, using the threat of a rating downgrade as a way to put political pressure on his opponents. If so, we need only look at the UK, where the threat of a downgrade comes despite large tax increases already built into their budget.


Spend, spend, spend…Solvency will soon become America’s # 1 issue placing us in the world’s bankruptcy court for restructuring, just like GM and Chrysler. Who could have ever imagined such a thing like the top two auto makers going bankrupt? But America has the “gimmees,” the “I wannits,” and the “poor mees” real bad lately. And our leaders keep handing the kiddies the cookie jar. We just cannot continue to keep spending like this on credit while unemployment is eating away at the revenues coming in folks! We must demand a ballanced, carefull, pay-as-you-go approach to solving our nation’s problems. And we have to let the people who will not act responcibly fail, so that they can pick themselves up by their bootstraps and learn from their mistakes. We must not feel sorry for adults who will not grow up!
Or they will never grow up!

Who is going to pay for all this magnimity?

The backsides of the stupid drowns who still go to work everyday while the users take advantage of their labor… That’s who! We conervative, hard-working folks are being outnumbered by the users who have no problems feeling entitled because they were raised on other people’s money, the “Do it for me Mommy” mentality and MTV.

Sickening! Just sickening! America is no longer the land where the industrious, independant, responcible people are rewarded for their efforts. No, Robin Hood is robbing the “rich” responcible people to reward the “poor me” folks who will not act responcibly.

My question is…how much leaway does our leadership think there is between our current net earnings weekly and the actual cost of living we tax payers face? That difference is the headroom there exists between the taxpayer being able to stay solvent themselves and the possible increase in taxes our leaders can tax us further to pay for all this warm-fuzziness. For most of us the cost of living runs pretty close to our net income… So where is there room for all our taxes to increase to pay for all this philanthropy going to come from?

Consumers: The world is not ending

May 26, 2009 17:11 UTC

That, I think, is the message from today’s big jump in consumer confidence. The Conference Board’s index vaulted by 14.1 points in May, following a gain of 13.9 points in April. The overall index now stands at 54.9. That’s double the February level of 25.3, a level which looks more and more like the nadir. But there is one whole long stretch of road between economic Armageddon and a robust recovery. We have avoided the former but we are nowhere near the latter. Let me know when consumers start spending ….


In your currency. Joe was good to me, when you donate

Deficit fears

May 26, 2009 16:56 UTC

I think strategist Andy Busch of BMO Capital Markets makes a great point in his morning note:

The issue of the radical fiscal experiment that is now underway in the United States is dominating stock, bond, and currency markets.  During World War II, the US debt had exceeded the size of GDP and had to be reduced by draconian methods.  The US is embarking upon a debt issuance program which is on track to take the debt total back above the size of GDP.


The “perfect storm” is happening because we have people in office who don’t have a clue how business really works! They do know how to milk a buck out of our back-sides though. They know how to spend money we don’t have to play “richy-rich” like “yo bling-bling” big spenders!

First they….

*Demanded that the automakers turn over to politically correct green cars overnight last summer, as if the auto makers don’t rely on the profits from their current inventory for capitol to make the next generation of cars…Now what do we get?
A once-not-so-long-ago solvent industry forced onto life-support, GM failing, thanks to the GREEN bunch and their party!
And vast unemployment is coming as the plants shut their doors!Now that’s worth it to save the planet! Forget the GDP!
(BRAIN DAMAGE, that’s all I can say.)

The greenies still want to…

*Fully shut down the oil exploration and drilling in the US…What will we get this winter and beyond for that high-minded foolishness?
Higher oil and gas prices! We need that! That move will make the UN and Al G.happy instead of employ and sustain our people. What will that do to the GDP when we have to buy foreign oil instead of produce it ourselves becaue we have no new wells to rely on in the future?


Right away we just had to implement the Democrat’s whole agenda, never-mind that we just had bailed out the banking industry spending billions….Gee it’s only barrowed money we’re spending on the folks who elected us!!!

*So we’re spending barrowed money like it is going out of style on drivel stuff and projects and non-existantgreen jobs…Now what do you get?
Thanks for the huge deficites for very little return, and a wellfare nation.

And of course we…
*Bail out every creep who got us into this mess with greed and corruption to aid them. Instead of throwing their buttoms in jail for not paying their taxes and the corruption…What justice do we get?
Absolutely nothing but drained investment accounts.

That’s the problem! It costs lots of money to make CHANGE happen…more than we have so we are spending faster than we make it.

And now the big spenders want health care for everybody, even those who don’t put into the pot as much as they’ll take out! A free-for-all!
Where’s the debt limit going to end up with that pie-in-the-sky idea, Democrats?

When do you think those foreingners are going to degrade our rating and up the lending rates out of sight because we’ve surpassed our income tax revenues to make the payments? When do you think they’ll call in their debts like the oil futures buyers did when they saw the gig was up last October and pulled out their money?

Debt is not a toy to play with! Stop playing BIG DADDY pandering to every jerk who supported the party!
Stop spending!

Sotomayor and policy uncertainty

May 26, 2009 16:28 UTC

The following quote from Supreme Court nominee Sonia Sotomayor (made during a panel discussion at Duke University in 2005) is the sort thing that may raise red flags for investors and business folks:

All of the legal defense funds out there, they’re looking for people with court of appeals experience, because it is–court of appeals is where policy is made. And I know, and I know this is on tape and I should never say that, ’cause we don’t make law–I know.  Okay, I know, I know. I’m not promoting it, and I’m not advocating it, I’m, you know…