James Pethokoukis

Politics and policy from inside Washington

Silicon Valley getting no love from Obama White House

Nov 18, 2009 20:24 UTC

Peter Thiel, billionaire founder of PayPal who now operates a hedge fund and a VC fund:

My observation on it is that it’s striking how few people from Silicon Valley are represented in the Obama administration in any sort of capacity. The only cabinet level person who is even remotely from Silicon Valley is the secretary of energy, who i guess was a physicist at UC Berkeley.  People supported Obama over Hilary Clinton in the primary in Silicon Valley in a big way and in a weird way its translated into like no influence at all.

Kudlow: Saving vs. consumption is a phony choice

Nov 18, 2009 19:47 UTC

The Great One has little use for the zero-sum politics (and economics) of false choices:

Before getting into the currency question, let me say this: I think more saving (and investment) by U.S. citizens is a great idea. But this need not come at the expense of consumption. In a prosperous free economy, people should be able to save, invest, work, and spend as much as they like. More is better than less in each case. Grow the pie larger.

Of course, if the president and his team want more saving and investment, they should end the multiple taxation of saving and investment. Unfortunately, our system taxes saving as income, capital gains, dividends, and inheritance.

Team Obama also intends to tax wealth more by raising the top personal tax rate from 35 to 40 percent. And they apparently don’t object to Nancy Pelosi’s plan to slap another 5.4 percent tax on the incomes and capital-gains of successful earners in order to finance a government takeover of health care.

Wealth is a crucial form of saving. And the investment that comes from extra saving is used to finance the entrepreneurial start-ups that create the jobs and incomes that allow families to spend. However, by creating a zero-sum game between saving and spending, the Obama planners are falling into an austerity trap — one that would hand the American economy a second-place finish in the global race for capital and growth.

COMMENT

James might be correct if the “free market” were limited to areas that are not central to human development and well being.

If the free market were put in its place then perhaps there would be more money for consumption. But when citizens have to choose between basic needs and shiny wants, the needs will win every time.

If education, health care, and housing were socialized just like our military, police, and fire protection, then perhaps there would be some money left for consumption. But you can’t expect consumers to carry the economy if the economy is not taking care of its consumers. You can’t get life from what is lifeless. The American consumer is tapped out. Give something back and we will see growth.

Healthcare reform update: It’s all about 60 votes

Nov 18, 2009 19:37 UTC

My sources tell me that reconciliation — pushing through HC in the Senate with 51 votes with a special parliamentary procedure — isn’t going to happen. So the big votes will need 60, including just opening debate. And rest assured that if Reid thinks he has 60 to pass, the debate will immediately come to an end.

Keith Hennessey gives his odds update:

I am lowering from 60% to 50% my projection for the success of comprehensive health care reform.

  1. Pass a partisan comprehensive bill through the House and through the regular Senate process with 60, leading to a law; (was 40% –> 30%)
  2. Pass a partisan comprehensive bill through the House and through the reconciliation process with 51 Senate Democrats, leading to a law; (steady at 20%)
  3. Fall back to a much more limited bill that becomes law; (was 20% –> 15%)
  4. No bill becomes law this Congress.  (was 20% –> 35%)

I think there is zero chance a bill makes it to the President’s desk before 2010.  If a bill were to become law, I would anticipate completion in late January or even February. …

I have lowered my projection of Leader Reid succeeding for three reasons:  Pretty much everything has to go right for him to win on cloture in mid-December. He has no more wiggle room on the schedule, and new intra-Democrat policy fights are popping up.

I think his members are going to get beat up about health care and jobs over Thanksgiving recess, then return to Washington to face another bad jobs day Friday the 4th. If moderates demand large substantive concessions for their votes, liberals like Senators Rockefeller and Boxer may refuse. They may tell Reid they will oppose cloture if the bill moves toward the  center, and instead advocate abandoning regular order and starting a clean reconciliation process in January. House liberals might join this effort.

COMMENT

I’m hopeful this thing will get killed in the Senate, but have big doubts. The fact that Reid included a public option in the Senate bill suggests to me he has more confidence in getting those 60 votes than the critics are suggesting. Without a public option he could still armtwist liberals by saying it would be restored in conference. But including the public option suggests his fears of losing centrists over that issue may be overblown. For my money, Leiberman is the last best hope of sanity in this matter and his could be the key vote.

Posted by Bill, Fairfax, VA | Report as abusive

Why cap-and-trade is ‘dead policy walking’

Nov 18, 2009 14:02 UTC

Carbon cap-and-trade legislation appears to be Dead Policy Walking in Washington. The devaluation of the Copenhagen climate summit – now the goal is a “politically binding” rather than a “legally binding” agreement — reflects the emerging political reality in the United States. Yes, a bill did pass the House of Representatives in June. Also, the Senate Environment and Public Works committee passed a version earlier this month. So President Barack Obama won’t go to the talks in Denmark with empty pockets next month.

Publicly, Senate Democratic leaders say they are only pushing off debate and consideration of a comprehensive climate change bill until spring. But it is hard to get a major bill passed in a Democrat-controlled Senate when the Democratic majority leader of the Senate wants the bill to go away. And have no doubt that Senator Harry Reid would like to see cap-and-trade go away — or at least disappear until after 2010.

This explains why six different Senate committees will consider the bill, the same recipe for legislative inaction that bogged downhealthcare reform. It’s pure politics. The 2010 midterm elections are shaping up to be tough contests for many Democrats thanks to the anti-incumbent mood of a recession-weary electorate. And most signs point to a sustained level of high unemployment.  As Federal Reserve Chairman Ben Bernanke said in a recent speech, “The best thing we can say about the labor market right now is that it may be getting worse more slowly.”

A new Gallup poll finds that 51 percent of Americans see the weak economy or high unemployment as their biggest concerns. Barely 3 percent mention the environment. And Democrats have been unable to sell cap-and-trade as a job creator. At worst, the public sees it as a jobs killer or a costly energy tax. That charge has particular weight in Reid’s home state, Nevada, a high energy-use state. (All those air conditioners!) So Reid doesn’t want to have to vote for it, which he would be compelled to do as majority leader. And neither do moderates like MaryLandrieu, Blanche Lincoln, Mark Pryor, Debbie Stabenow and Jim Webb. They noticed the heat that centrist House members who voted for cap-and-trade took from constituents during Congress’ summer break.

Webb of Virginia may point to one path forward with a new bill he is co-sponsoring with Lamar Alexander, a Tennessee Republican. It would spend $20 billion on five mini-Manhattan Projects to study various clean energy technologies, including nuclear.

It’s a plan that seems more likely to create jobs, grow the economy and help the environment — at least more so than one completely out of sync with the electorate. And it is one also more likely to make it into law. Despite being subjected to years of hectoring from the media, entertainment industry and government, the American public clearly has no appetite for any climate-change plan that involves more taxes, more regulation and a possible lower standard of living.

And if cap-and-trade is dead for 2009 and 2010, it probably has little hope of reviving in 2011 or beyond when Congress is unlikely to be as Democratic or as green.

COMMENT

Carbon cap-and-trade legislation appears to be Dead Policy Walking in Washington. The devaluation of the Copenhagen climate summit – now the goal is a “politically binding” rather than a “legally binding” agreement — reflects the emerging political reality in the United States. Yes, a bill did pass the House of Representatives in June. Also, the Senate Environment and Public Works committee passed a version earlier this month. So President Barack Obama won’t go to the talks in Denmark with empty pockets next month.

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