James Pethokoukis

This is much punchier than “jobs, jobs, jobs, jobs.” James Lovelock (via the Climate Progress blog):

If we can keep civilization alive through this century perhaps there is a chance that our descendants will one day serve Gaia and assist her in the fine-tuned self-regulation of the climate and composition of our planet. We have enjoyed 12,000 years of climate peace since the last shift from a glacial age to an interglacial one. Before long, we may face planet-wide devastation worse even than unrestricted nuclear war between superpowers. The climate war could kill nearly all of us and leave the few survivors living a Stone Age existence.

When the G20 went after tax havens last April, I said it was just a first step toward a push for “tax harmonization,”  a fancy phrase that really means getting low-tax nations to raise their tax rates. Then I see what the prime minister of Finland is advocating:

We have to initiate discussions at the European Union level about how to prepare for the post-crisis period. Getting public finances in order is a must if we are to grow, create employment and provide the welfare services that we in Europe value so much. …  This will require tight control and, in many countries, painful cuts. However, it would be unrealistic to assume that all the balancing could be done on the spending side alone. … The overall tax rate will have to rise as well over the longer term. In some areas that can be done without much consultation between the countries. … However, raising such taxes can have detrimental effects on economic activity. This is especially so when a country acts on its own: capital and people can respond by migrating to jurisdictions with lower rates. … Parallel measures would help all of Europe: tax competition risk would be reduced and the public finances of individual countries would improve. Such co-ordinated tax changes could set also an important global example. In particular, it might encourage the US – with lower tax levels in most areas – to do what has to be done to address its spiralling budget deficit.

My spin:  Don’t raise the bridge, lower the river! Why countries don’t try to instead supercharge their economies is beyond me.

A Treasury insider talk about the ever-shrinking PPIP (via Noam Scheiber):

If you had asked–I don’t want to speak for the secretary–what’s problem number one? I think he’d say capital. Problem two? Capital. Problem three? Capital. Everything was in the service of that view. The legacy loans program was meant to help clean balance sheets. It was not an independent good in itself. It was seen as friendly to equity raising. Now people say the legacy loans thing is not gaining as much traction, so is that a failure? But because we had a good outcome in terms of raising equity, they [the banks] were able to raise equity without shedding assets … you should be okay with that.

My spin:  This reminds me of an old Letterman sketch with Chris Elliott about a TV show where all you ever saw was the promos:

The Regulator Guy: A series of expensive-looking promos for a Terminator-like action character aired on “Late Night” over a period of several months, with Elliott incongruously playing the super-cool half-human, half-mechanical “Regulator Guy”, even speaking with a bad Schwarzenegger-esque accent. Repeatedly promoted during “Late Night” as “Coming soon to NBC!” the “Regulator Guy” appeared once and only once in an actual sketch on the show, but this appearance was a (deliberately) cheap and poorly-done affair, which ended with Letterman interviewing the new sidekick character, Ajax, while completely ignoring Elliott (much to his faux-chagrin).

Some liberals think so, says Ezra Klein:

Late last week, I was summoned to a windowed meeting room overlooking the White House to sit with members of one of Washington’s nimbler, smarter think tanks. The assembled thinkers tried to convince me that Barack Obama was missing a historic opportunity: The legislation that was traveling under his name was increasingly unlikely to bind the middle class to his presidency or party. Cap-and-trade was a mess. Health reform was going to fail on cost control. And what of jobs? Obama, they said, had to take a firmer hand with the Congress. His hands-off approach was a fiasco. Leadership matters. It’s important. It’s needed.

My spin: Where did it all start going wrong. A too small stimulus? Not nationalizing the banks? Picking Biden? And overshadowing all of this is an economy that will have poisonously high levels of jobless as far as the eye can see.

It was Nancy Pelosi’s star turn. (The blindingly white pant suit — Armani? Lovely.) The House speaker giving the closing argument at the end of the cap-and-trade debate that she personally pushed to the floor. The final pitch. “Just remember these four words for what this legislation means: jobs, jobs, jobs, jobs. Let’s vote for jobs.” Then the victorious vote. The greatest achievement of her legislative career. “An extraordinary piece of legislation,” said President Obama.

But what did Pelosi really accomplish, other than momentarily satisfying the powerful Green Lobby?

1) Getting major energy and environmental legislation passed in the House of Representatives isn’t by itself a landmark accomplishment. Been there, done that. In 1993, Democrats passed an energy tax by a vote of 219-213. And doing it again by a similarly razor-thin 219-212 vote — after more than a decade-and-a-half of intense political lobbying, numerous scientific studies, global media attention, Hollywood hectoring and, of course, Al Gore — doesn’t show a whole lot of tangible political progress for green Democrats.
[Why Obama's big economic gamble is failing.]

2) One of Pelosi’s goals also was to get the bill passed without the votes of Democrats who might suffer at the polls in the 2010 midterm elections if they voted for the bill. (Many Democrats suffered for their BTU votes in the 1994 congressional elections when the Republicans won back the House.) Mission accomplished, then. But it speaks poorly for Democratic messaging that cap-and-trade was such a risky vote for so many of the party’s members. It surely would have been better for the current momentum and eventual legislative success of the cap-and-trade bill for it to have passed the House by a wide margin.

3) The same delicate, precise formula that allowed the bill to succeed in that chamber won’t work in the Senate. For instance, more than a quarter of the bill’s House support came from the California and New York delegations whose members account for a fifth of the House. But those two states, notes Jay Cost of RealClearPolitics, make up just four percent of the Senate. A cap-and-trade bill that can’t pass the House by a big margin probably can’t pass the Senate by even a narrow one.
[Why Obamacare might be flatlining.]

4) And of course, the Senate, where you need 60 votes to end a filibuster, is a different manner of beast. Yes, Senate Democrats currently have 59 votes and seem likely to get a 60th from Minnesota. But there may already be as many as eight Democrats ready to vote against Pelosi’s creation. And as unemployment continues to rise, climate change may sink further down the list of American voters’ priorities and that of centrist senators.

5) Then there was that final pitch. Jobs, jobs, jobs, jobs. A sign of desperation, really, since the traditional economic argument for dealing with climate change has never been that it was inherently pro-economic growth or a job creator. Rather, the intellectually honest argument is that the economic costs of climate legislation would be less than the impact of doing nothing and letting carbon emissions skyrocket. But cap-and-trade is not a free lunch, and the Pelosi Democrats and eight Pelosi Republicans shouldn’t suggest it is.

Bottom line: President Obama surely would love to have a signed bill in his pocket by the time he wings his way to the global climate conference in Copenhagen next December. But rather than passing cap-and-trade, it is more likely that the Senate will have either voted it down by then, or not voted on it at all. (Recall that the 1993 B.T.U. bill never made it to a vote.) By then, that simple carbon tax-payroll tax swap some conservatives (and Gore) keep touting might start looking awfully inviting to Pelosi.  But hey, she sure did look great in that pant suit.

White House economist Christina Romer says government stimulus is “going to ramp up strongly through the summer and the fall.”  This implies that a lack of stimulus explains the poor economy — not that the Obama stimulus plan is simply not working. Yet what stimulus is flowing into the economy isn’t working, as many predicted — including me and Milton Friedman. Listen to Gluskin Sheff economist David Rosenberg (bold is mine):

In April, total stimulus from the federal government to the personal sector, in the form of tax reduction and increased benefits, came to $121 billion at an annual rate. But that month, in nominal terms, consumer spending rose the grand total of $1 billion. Then we found out on Friday that in May, the total stimulus from the Obama economics team came to $163 billion at an annual rate, and consumer spending increased by a measly $25 billion (again at an annual rate). The big story is that the personal savings rate surged again to a new 16-year high of 6.9% from 5.6% in April and 4.3% in March. This is a repeat of the fiscal impact from the tax relief a year ago when the savings rate jumped from 0.2% in March 2008 to 4.8% in May 2008. This is what economists refer to as “Ricardian equivalence” — the money from Uncle Sam goes into the coffee can instead of being used to buy more coffee.

So let’s get this straight, the future taxpayer is being asked to contribute to a policy today that is aimed at perpetuating a consumer cycle — and yet for every dollar that is coming out of Washington to support a 70% consumption/GDP ratio, it is getting barely more than 8 cents worth of new spending activity. In real terms, as was the case with the tax rebates of just over a year ago, the real impact is on the savings rate, and it is very clear that not even the most aggressive monetary and fiscal policy since the 1930s is going to stop consumer spending in volume terms from rolling over in the second quarter.

Scott Grannis, the Calafia Beach Pundit, think market fears have ebbed, but they may not return to previous low levels:

Some of the lost ground may not be recoverable, however, and that would be the portion attributable to misguided policy actions of the Bush administration (e.g., the Paulson/Geither bailouts), and the Obama administration (e.g., the $800 billion stimulus package, the Chrysler takeover, the trillion-dollar-deficits budget, and more recently the cap and trade bill, all of which were rammed through with the mantra “there’s no time to look at the details, just vote yes”). These policy actions all share two dreadful features: they dramatically expand the scope and power of government, and they promise a significant increase in future tax burdens. And that, in turn, means that the future growth prospects of the U.S. economy have been diminished. Profits will be less than they otherwise might have been, and living standards will be less than they otherwise might have been

The president on cap-and-trade, via the WSJ): “My strong belief is, is that innovation and technology are going to accelerate our process beyond these targets, and that we’re going to look back and say we can do even more.” Despite conservative naysaying about alternative technologies, there could well be huge leaps forward. But the same is also true of nuclear energy technology, which is why it is such a shame that the Obamacrats want to push it out of the debate .

House Speaker Nancy Pelosi said the cap-and-trade bill was about “jobs, jobs, jobs, jobs.” But liberal economist Paul Krugman tells National Public Radio a different story (thanks to OpenMarket):

There will be more wind farms built. There will be people retrofitting power plants to reduce their emissions. There will be people weatherproofing housing and commercial buildings.”

What economists would say is that employment would be just about the same as it would have been otherwise, but it will be a different mix of jobs.

Will the Supreme Court decision on the Ricci case affect Judge Sonia Sotomayor’s chances of making it on the Supreme Court? It gives GOPers a stronger handhold during questioning, no doubt. I will be keeping an eye on the betting markets with this one. So far they are not moving and still rate her a 95 percent probablity of being confirmed.