James Pethokoukis

Politics and policy from inside Washington

The White House and jobs stimulus

Dec 3, 2009 20:07 UTC

From Marc Ambinder:

Really: the White House does not seem to believe that (a) anything sensible to meanginfully reduce the unemployment rate can be proposed, completed and paid for — and executed — by next November. Nothing, in any event, that wouldn’t jeopardize recovery in the long-term. This frustrates people in the party to no end, as well it might.

10 ways to cut the U.S. budget deficit

Dec 3, 2009 19:49 UTC

How to put the budget on a “sustainable path” from Jeffrey Frankel of Harvard (some excerpts):

First, auction off most greenhouse gas emission permits, rather than giving them away to firms (which would confer windfall profits).

Second, raise the gas tax.

Third, cut agricultural subsidies to rich farmers and agribusiness, saving money and improving economic efficiency.

Fourth, continue to cut expensive weapons systems that the military doesn’t want, but have in the past been kept because the suppliers are in the districts of influential congressmen.

Fifth, end manned space exploration.

Sixth, let the George W. Bush tax cuts for the rich expire as under current law.

Seventh, encourage hospitals to standardize around national best-practice medicine – to avoid unnecessary tests and procedures – using levers such as making Medicare payments conditional on best practices.

Eighth, limit or eliminate the tax-exemption for employer-paid health insurance (proposed by Senator McCain), at least the cadillac plans which are very expensive but don’t even pay off in health results (proposed by Senator Kerry).

Ninth, ideally, eliminate the tax deductibility of mortgage interest too.

Tenth, to save Social Security, raise the retirement age (just a little), tax higher incomes (just a little), and progressively index benefits for future retirees to price inflation, rather than to wage inflation (just a little).

Me: As Ryan Ellis of ATR notes, “Jeff frankel has 5 tax hikes totaling $500 bil per year, and 5 spending cuts totaling $50 bil per year. How fair!” Toss in a VAT, which Dems would love to do, and you talking near a trillion dollar in tax increases. I cant see how that is good for growth. More cuts!

COMMENT

Well some of these suggestions are ok but most would hurt. Example: mortage interest would hurt the housing industry as well as the tax payer. If I could not write off my interest I am not sure that I would have a house.
I think I should be able to write off all interest myself. My house hold should be no different than a business in some ways. If you could write off interest on a car load car sales would go up hink about it. What goes around comes around.
We need to cut the size of this monsterous government. 10% to 15% National sales tax for ALL, with NO deductions for anyone. Those making under $25000 a year pay no taxes, get rid of the IRS, WHOA what a savings that would be, get small business and large business back in the positions where the can once again create JOBS! for Americans. Put a halt to out sourcing our work force. Fair trade needs to be demanded. We have helped the other guy out long enough.
I tell you also we need to get rid of those greedy dirt bags in congress and get someone in that listens to the people. Need to cut their wages and benifits to match ours. This would soon make a big change in these greedy people.

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The Bernanke Dilemma

Dec 3, 2009 18:45 UTC

BB’s effort to be the charming professor has failed. Only a  fifth of the public supports his renomination. It’s now almost gospel in the GOP (at least outside DC) that the Fed should be abolished. And Democrats are picking their spots for attacks, such as Dodd’s idea for a single regulator and Frank’s idea to neuter the regional bank presidents.

Certainly more transparency is needed. Among other things, Federal Open Market Committee minutes could be released days after a meeting rather than weeks. Like Jean-Claude Trichet, his European Central Bank counterpart, Bernanke could even hold press conferences right after FOMC meetings.Bernanke should also consider backing off the idea that the Fed should be the U.S.’s systemic risk über-regulator. He might win the case on the Fed’s credentials, but accumulating power while resisting accountability is a political loser. For Bernanke, a bit less authority might mean a lot more support in Washington and on Main Street.

If not, then expect a continued push for an audit bill along with other efforts to increase congressional influence.

COMMENT

Here is Ron Paul and Jim DeMint in the WSJ:”The Fed has also, for the past three decades, been required to engage in monetary policy with the goal of maintaining stable prices and full employment. Since the natural trend over time is for prices to decrease, a mandate to maintain stable prices is a mandate to pursue an expansionary monetary policy and inflate the money supply to counteract the lower prices we would expect from increased productivity.”http://online.wsj.com/arti cle/SB1000142405274870478230457454228097 1009044.htmlCentral banking is inherently unstable and supremely complex. It fails for the same reason as central planning failed in the Soviet Union. Abolish it and bring back free-market capitalism.

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How Obama is freezing the job market

Dec 3, 2009 10:20 UTC

Let’s assume that the much-hyped White House “jobs summit” turns out to be a free-flowing exchange of ideas and views. Could happen. If that’s the case, then President Barack Obama shouldn’t be shocked if a few CEOs dare suggest that the sweeping-yet-stalled Obama agenda might … actually … you know … no offense, Mr. President … be contributing to the jobless recovery. (The union and academic invitees will protest mightily, natch.)

CEOs are saying as much amongst themselves. At a recent symposium, Intel boss Paul Otellini, a contributor to both parties, expressed concern about the “amount of variability in the system” created by the state of policy flux in healthcare, energy and tax policy. “It is very difficult to make a hiring decision,” he said. General Electric chief executive Jeffery Immelt, a strong supporter of Obama’s cap-and-trade proposal, added he would just like to “know what the rules are.”

All in all, a disturbing replay of the 1930s when FDR’s big changes left business reeling with uncertainty and confusion. The “devil you don’t know” and all that.

Small business is certainly with Big Business on this, particularly regarding the mercurial nature of healthcare reform. The substance of ObamaCare continues to morph daily — from the state of the public option to employer mandates to financing expanded coverage – as Senate leader Harry Reid scrounges for votes. On energy, the president will make big promises at Copenhagen even though cap-and-trade looks stillborn in the Senate.

As for financial reform, Senate banking committee chair Chris Dodd has proposed sweeping changes, while the Tim Geithner-Barney Frank version in the House seems beamed in from a universe where the credit crisis never happened. Compromise could prove elusive. Even Obama’s tax reform panel has delayed releasing its findings.

So Corporate America is about to enter 2010 – an election year – with the fate of the ambitious Obama agenda uncertain. Maybe the only thing for sure is that whatever job-creation package the White House and congressional Democrats eventually gin up, it will likely be a $300 billion or so combo of more transportation spending, more aid to cash-strapped state and local governments and some sort of hiring tax credit.

(And that gets at another critical flaw with the jobs summit. As any of the executives could tell Obama, brainstorming sessions are often the tool-of-choice of the highly ineffective manager. Such confabs are frequently used to give team members the illusion that they are contributing to the idea generation process. In fact, the manager has already made his decision. And that is, more or less, the case with Obama. At the very least, don’t expect any CEO suggestions of lowering personal, corporate or investment tax rates to get even a whiff of consideration from the White House.)

Of course, Obama could pivot and revamp healthcare reform into a more incremental, targeted bill that might actually pass with decent margins in both houses. And while cap-and-trade is gasping for air, a deficit-neutral carbon tax (offsetting payroll taxes) might actually pull in significant Republican support. Maybe even a fat payroll or corporate tax cut.

But the tendency toward election-year gridlock is fast approaching. And for frazzled Corporate America and a frozen job market, gridlock – and the uncertainty that goes with it – is not good.

COMMENT

Some would say that all of this is being done by Obama in order to destroy our way of life and impose socailism on us. Porgressives say “nothing like a good crisis to impose your will”. Thats about the only logical reason I can come up with for all of the stupid things that are being done. Hope I am wrong.

Posted by Ray Hull | Report as abusive
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