James Pethokoukis

Politics and policy from inside Washington

5 questions for CNBC’s Michelle Caruso-Cabrera

October 29, 2010

I’m a big fan of Michelle Caruso-Cabrera’s analysis and insight on CNBC, so I was delighted to hear she was writing a book. And “You Know I’m Right: More Prosperity, Less Government” doesn’t disappoint. It’s a straightforward, highly readable argument in favor of fiscal conservatism and limited government. Like me, she spent her childhood in the 1970s and 1980s and experienced firsthand the impact of economic policy gone awry and economic policy done right. During Ronald Reagan’s presidency, she writes:

In the simple way a child views the world, my family’s life got a lot better. Happier. Once my parents felt they had control of their money – and their lives and livelihood – they were so much more relaxed. I wasn’t conscious of it at the time, but I learned implicitly how much economic policy matters to our everyday lives. Ronald Reagan taught me that.

Well put. Here is a bit more on how she views the world:

1. Do Americans need to pay higher taxes to deal with the budget deficit?

Nope. Americans do not need to pay higher taxes. What we “need” is for the government to spend less money. There are entire departments that can be eliminated, like the Department of Energy. It was created under the Carter administration to end our dependence on foreign oil. Obviously, it has failed. I have an entire chapter about every department that can be completely erased.

But the big blob eating the federal budget is Medicare, and to a lesser extent Social Security, In my book I spend a lot of time about what should be done on those fronts. We face some tough choices, but they are easier to deal with now, rather than putting them off into the future. First and foremost: personal accounts. I am tired of the federal government spending social security taxes on everything but.

2. Do you think there is a difference between being pro-market and pro-business?

In theory there shouldn’t be a difference between being pro free-markets and pro-business, but increasingly there is. I find that many in the business community think we ought to gum up the tax code with all kinds of special breaks and credits and blah blah blah. That is the government picking winners and losers. One low corporate tax level is all we need. You need a government subsidy to survive? Than you shouldn’t exist. I have a lot of fun in the book pointing out the silly things that happen when government decides to pick winners, such as alternative energy. I explain how the federal government passed an alternative energy tax subsidy that actually INCREASED the use of fossil fuels? Only Congress is capable of such a thing.

3. How do you deal philosophically with the TARP bank bailout since it was government coming to the rescue of the private sector?

This is a tough one. In the end I come down to the payments and settlements system, which appeared to be under threat at the worst moments of 2008. I was reporting from Europe when some merchants there started to decline credit cards. The modern-day version of money supply was shrinking fast. As Milton Friedman showed us all, it was the decline in the supply of money that dramatically worsened the depression in the 1930s. (I dedicate my book to him by the way, because he viewed economics through the prism of liberty.)

4. What do you make of America’s tilt toward protectionism such as the China currency bill?

Our tilt toward protectionism is sadly consistent with weak economic periods in history. It is self-defeating.

5. How would you boost the economy right now? Austerity, tax cuts, infrastructure spending, something else?

Best way to improve the economy: A clean tax code, with low marginal rates. And a Congress that stops making new regulations.

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