James Pethokoukis

Will Bernanke save the dollar like Volcker did?

October 9, 2009

David Goldman over at the Inner Workings blog, notes a key anniversary:

Inflation had crossed into double digits after four years of mismanagement by the Carter administration. The gold price was rising (and about to hit an all-time record when the Soviet Union invaded Afghanistan the following Christmas). America’s international position had collapsed; the European elites believed that America would lose the Cold War; America was in deep recession even while inflation soar. Volcker had no choice but to raise the federal funds rate to 15%. The dollar stabilized but the US economy went into free fall.

A windfall profits tax? Why won’t the 1970s stay dead?

October 9, 2009

Apparently there is no idea bad enough that it can’t be resurrected by desperate politicians, as veteran Capitol Hill watcher Pete Davis notes at the must-read Capital Gains and Games blog:

Obama wins Nobel Peace Prize. But he shouldn’t have

October 9, 2009

My quick thoughts:

1) The complete abdication by the Obama administration on trade should disqualify him from the Nobel Peace Prize. Free trade has lifted hundred of millions out of poverty worldwide and promoted a closer global society. But the Obama White House has been as protectionist as any in memory. Free trade is that the core of  foundation of the post-World War II economic order.

50 examples of U.S. government waste

October 8, 2009

Ending or fixing this stuff (via Heritage Foundation) is not going to fill a $1.4 trillion budget gap, but they would be nice confidence builders:

VAT Attack! The value-added tax, Bruce Bartlett, the GOP and deficits

October 8, 2009

I have been exchanging emails with economic analyst Bruce Bartlett, a supply-side economist who has come out for higher taxes.  (See the NYTimes article on him earlier this week.) Bartlett (who blogs at the wonderful Capital Gains and Games) thinks Uncle Sam will never cut spending, thus taxes must go up, preferably in the form of a VAT.  He also has book coming out next week, The New American Economy: The Failure of Reaganomics and a New Way Forward.

How to get a strong dollar

October 8, 2009

The enlightening David Malpass in the WSJ:

Measured in euros (a more stable ruler than the ever-weakening dollar), U.S. real per capita GDP is down 25% since 2000, while Germany’s is up 4% and tops ours. The solution is a strong U.S. jobs and wealth program. It has to include stable money, a flatter, more competitive tax structure, spending restraint, and common-sense bank regulation so small business lending can restart. Treasury has to rapidly lengthen the maturity of the national debt and take steps to protect the Fed from market losses on its long-term debt holdings.

Why the cost of healthcare reform will rise

October 8, 2009

A great analysis of the Baucus healthcare bill by Jim Capretta. Read the whole thing, but this is a key graph:

Should America be more like Denmark?

October 8, 2009

Blogger Matthew Yglesias talks up Denmark and high taxes over at ThinkProgress:

The overwhelming fact about Danish public policy is that taxes in Denmark are really high. There’s a substantial VAT and also a substantial income tax. You pay taxes to buy a car, and you pay higher taxes for heavy cars. Gasoline taxes are high (gas costs almost $7.50 a gallon) as are taxes on electricity, which account for more than half the cost of electricity to consumers. In exchange for all this, the Danes have basically achieved all the stuff progressives say they want. The country is rich, clean, and highly egalitarian. The high taxes finance generous public services, and the high levels of expenditure allow the country to do without a lot of extraneous business regulation which helps keep the place economically dynamic. According to surveys, the people are all very happy, which is exactly what you would expect from a very rich, very egalitarian society. And as this trip has emphasized, they do it all while doing much less polluting than Americans do, despite a higher average material standard of living.

2012 Watch: Romney goes after cap-and-trade

October 8, 2009

Mitt Romney attacks cap-and-trade via video over at his PAC website, Free and Strong America. He basically portrays it as an energy tax on Americans (which it is) that will hurt American competitiveness vs. India and China (which is it will.)

Is Geithner Wall Street’s man in Washington?

October 8, 2009

Yes, the treasury secretary talks to bankers, says the Associated Press:

The calendars, obtained by the AP under the Freedom of Information Act, offer a behind-the-scenes glimpse at the continued influence of three companies — Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. — whose executives can reach the nation’s most powerful economic official on the phone, sometimes several times a day.