James Pethokoukis

Here is a point that has gotten lost in the Bush tax cut debate. Even with the tax cuts, Uncle Sam will have plenty of revenue. As I wrote earlier this week:

Now let’s say all the tax cuts were permanently extended — Orszag’s nightmare scenario. According to Orszag’s old pals at the Congressional Budget Office, federal tax revenue would be 18.6 percent of GDP in 2020, 19.2 percent in 2035, 19.8 percent in 2050 and 22 percent in 2080. In other words, even with all the tax cuts extended, government revenue would still rise well above its historical average of roughly 18 percent since World War Two.

And this chart also illustrates the point:

It looks like an end-run around the Senate, but liberals activists have still managed to get Elizabeth Warren into the Obama administration. A few thoughts:

1. I keep hearing how the WH is going to adopt a new tone with business. But picking Warren means that adjustment is more of a 2011 thing, I guess.

2.  I also hear that this Plan B might provoke senate Republicans into holding up Obama’s stalled Fed nominees.

3. Doesn’t this undermine Tim Geithner just a bit? She has been highly critical of Geithner in relation to TARP, which he has touted as key to the economic recovery.  Warren would also have preferred, her work on the TARP panel suggests, bank nationalization and mass bank executive firings in 2009. Geithner was completely against that.

4. The financial industry will complain about the Warren pick, but it now seems unlikely that either Warren or Michael Barr will end up running this new agency.  The two differ more on style than substance. So maybe the eventual pick will be someone more moderate that can better deal with a more Republican congress.

5. There is an old management rule: Never hire someone you can’t fire. Obama violated this rule by picking Hillary Clinton for secretary of state.  And he just did it again.