James Pethokoukis

Rahm Emanuel famously said that you “never want a serious crisis to go to waste.”  And certainly the sense of crisis earlier in the year helped the White House pass the $787 billion stimulus package. But where stands the rest of the Obama legislative agenda?

Healthcare. The House will likely pass a bill this weekend, but big difference remain with the Senate, including paying for the plan and what to do about a public option.

Cap-and-trade. Kerry-Boxer is going nowhere which is why Kerry and Graham are working on a a dual-track approach.

Financial regulatory reform. The House and the Senate have completely different notions about what to do about system risk regulation. Plus there may be new efforts to try and “shrink” the banks and limit the scope of future activities.

See you in 2010, Obama Agenda!

Ed Yardeni says the rising price of gold is sending a message about the political economy:

Yesterday, I observed that gold tends to be a hedge against reckless governments as measured by their widening deficits and mounting debts. It is also a hedge against governments that either cause or enable inflation to rise. It is interesting to note that:
(1) The price of gold soared from a cyclical low of $104 on August 31, 1976 to a high of $737.5 on January 22, 1980. President Gerald Ford left office in January 1977, near the low for gold. Jimmy Carter was President from 1977 to 1981, when gold soared.
(2) By the time Ronald Reagan left the White House in January 1989, the price of gold was down to $408.3. It fell to $330.9 when George H. W. Bush left Washington.
(3) It continued to drop during Bill Clinton’s two terms, and actually bottomed almost the day George W. Bush moved into the White House.
(4) From then on it was mostly straight up with a brief drop late last year.

Draw your own conclusions, or else, let gold be your guide. Confidence in currencies in general, and the dollar, in particular, was lowest during the Carter and Bush Jr. years, and the first 10 months of the Obama Administration. Confidence was highest during the Reagan, Bush Sr., and Clinton years, when the federal deficit was shrinking and turned into a surplus. During those years, the US government was mostly pro-business, and the public was mostly pleased with the government’s economic policies.