James Pethokoukis

Politics and policy from inside Washington

5 questions for CNBC’s Michelle Caruso-Cabrera

Oct 29, 2010 14:05 UTC

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.

Obama on CNBC

Sep 20, 2010 19:26 UTC

The president participated in a town hall meeting earlier today on CNBC. A few thoughts on the event:

1. He noticeably dodged a question about whether, in the name of fiscal prudence, all the Bush tax cuts should eventually be left to expire. That is the position of his former budget chief, Peter Orszag, as well as that of many deficit hawks. It does seem strange for him to say America cannot afford the upper-income tax cuts, but also support the lower-income tax cuts which cost far more, according to the Congressional Budget Office.

2. He seems to think the Tea Party crowd is a “Party of No” manifestation with no real agenda other than to complain about his policies. But that is not how I read them at all. For instance, many activists are big fans of the Fair Tax and  Paul Ryan’s budget-cutting Roadmap for America’s Future.

3. The POTUS said tax rates were as low as they were under Ronald Reagan. When Reagan left office, the top marginal rate on ordinary income was 28 percent. Today it is 35 percent, and Obama wants it to go to 40 percent. More evidence the White House thinks America undertaxed.

4. More evidence the economic New Normal may create a political New Normal. The first question was telling. It was from an Obama supporter who was very frustrated by the pace of the recovery:

I’m one of your middle class Americans. And quite frankly I’m exhausted. I’m exhausted of defending you, defending your administration, defending the mantle of change I voted for, and deeply disappointed with where we are right now.

Obama stuck to his guns, arguing the measures he had undertaken since taking office in January 2009 were slowly pulling the country back to health:

My goal here is not to try to convince you that everything’s where it needs to be — it’s not. That’s why I ran for president. But what I am saying is … that we’re moving in the right direction.

5. Overall, the crowd seemed anti-bank, anti-China, pro-Obama.

6. Certainly the big quote of the day was when he said his economic team had done an “outstanding job.”


James, I enjoy your commentary on CNBC. That “Town Hall Meeting” was a sham. 1) The audience was packed with progressive democrats as evidence by the overwhelming applause after the President’s comment about how”assuming Sen. Boehner would be Speaker of the house was premature”. 2) Scaramucci obviously made some deal with the administration to be publically but gently chided by the POTUS in return for a shameless, “rubbing me on the back with a soul brother handshake photo-op” after the meeting. Can you say Shiela Jackson Scarramucci? I mean, seriously. And 3) why can’t the administration start these things on time? I mean, really….how far ahead was this scheduled? If it is supposed to start at 12:00, why make the American people wait. Obama has had….oh I quit counting….up-teen press conferences and I don’t believe even one has started on time.

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