James Pethokoukis

Politics and policy from inside Washington

Dobbs, 2012 and the ghost of Perot

Nov 27, 2009 15:45 UTC

If former CNN anchorman Lou Dobbs decides to make an independent bid for president in 2012, he will probably find the political climate as hospitable for an insurgent run — if not more so — as it was in 1992, when Ross Perot captured a fifth of the popular vote. (It was the best showing by a third-party candidate since Bull Moose Teddy Roosevelt finished second with 27.4 percent of the vote in 1912.)

The dreary economic New Normal that is the aftermath of the Great Recession has created a huge political opening for Dobbs or Michael Bloomberg or Sarah Palin, or some other American with high visibility or deep pockets or both.

It was a slow-recovering economy and concern about big deficits that drove the Perot phenomenon. There’s a high probability both factors will be at play three years from now. The Center on Budget and Policy Priorities forecasts annual budget deficits to average $1.2 trillion over the next three years. And the Federal Reserve is forecasting a so-so economic expansion that will leave unemployment over 7 percent in 2012. Overall, the nation’s economic mood might be a lot worse than it was in 1992.

Then you have a populist, anti-Wall Street sentiment that neither Democrats nor Republicans have been able to capture successfully. The result is that party loyalties are frayed, with the tea party movement one manifestation. According to the Pew Research Center, 36 percent of Americans identify themselves as independents, the highest number since 1992. And they seem to be up for grabs. Barack Obama won 52 percent of the independent vote in 2008. But a recent poll by Rasmussen Reports shows Obama with a 61 percent disapproval rating among the group.

None of this means an independent would actually win. Rasmussen has Dobbs at 14 percent in a race with President Obama (42 percent) and Mitt Romney (34 percent.) With the more populist Palin replacing Romney, Dobbs gets 12 percent versus 44 percent for Obama and 37 percent for Palin.  Yet without Dobbs in the race, Romney is tied with Obama and Palin trails by just three. So an independent could, at the very least, radically alter the political landscape.

And not just for the GOP. Unhappiness about an escalation in the Afghanistan war and muddled healthcare reform could create a more liberal independent challenger. Take Howard Dean, for instance. The former Vermont governor and chairman of the Democratic National Committee has been ripping ObamaCare lately and says he would vote with Sen. Bernie Sanders of Vermont, an independent socialist, against it if he were a senator. And Dean sure knows how to use the Internet to raise money, as he showed in his 2004 run for the Democratic nomination.

But here is the bottom line: If the New Normal turns out to be worse than expected, with the GOP blamed for the original collapse and Democrats for a bungled remedy, an independent might accomplish much more than just being a spoiler.

COMMENT

Jim Gilchrist,who is a leader of more than a million Minuteman, Viet Nam vet with Purple Heart and other medals, charisma, well spoken, well known, been on turncoat Lou Dobbs Show, idiot Larry King Live Show and Fox News etc. retired accountant and nice guy. The fact that he is not a corrupt politician is gold. He will have the Minutemen,people who think like the Minutemen like us and the Vets behind him. He is a lot better than obama and the ones on the right by far for president.Lou Dobbs is a con artist with a hidden agenda for Money and Fame. Anyone who is really against amnesty and illegal has it in them like an arm or a leg. So he was never against amnesty and illegal from the beginning. Just the only way he could get Money and Fame. Schemer with illusions of Grandeur. Opportunist. Who is going to vote for him now other than his own family? That turncoat is a joke. The stunt he pulled would be like Rush coming out and saying he was really a Democrat. Dobbs stabbed his listeners in the back with really being for amnesty all these years for the money. But telling his audience he was against amnesty, illegal like them. Should be some kind of law against it.Palin is another one who is a schemer with illusions of grandeur. Opportunist. United the Republican base with religion and morals. She is copying bush’s strategy of using the fundies to be elected. After the fundies left the oval office bush and the Republicans made fun of them. How can these fundies be duped twice? But then the liberal left fundiea and left are duped by obama. Separation of Church and State. What is she going to do rule the country with the Bible instead of the Constitution? Well seeing as how she didn’t know what NAFTA was she doesn’t know the Constitution either. She left being governor of Alaska with how many? 50 ethic violations? She was against the poor polar bears etc when she was governor. Hypocrite hunts for the thrill of the kill. She is a big joke too.4th generation Democrat no longer and never again. There is no such thing as a Democrat today. My father’s Democratic Party when men were men and took care of their own, would never have been for illegal, foreign workers, amnesty, CAFTA, NAFTA, outsourcing, North American Unoin, NWO etc. like these so called Democrats today. The Democrats of today are just the opposite of my father’S Democratic Party, who were all for the Americans and US Made.

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PAYGO and pretend fiscal responsibility

Nov 23, 2009 20:09 UTC

Ed Yardeni calls it on PAYGO:

Too bad that there are so many devils in the details. Obama’s proposal for fiscal discipline totally exempts “discretionary spending” for defense, education, environmental protection and many other programs. Normal increases in entitlement spending (more beneficiaries, higher health costs, etc.) also aren’t covered. In other words, the increase in Social Security and Medicare spending resulting from the impending retirement of baby boomers doesn’t count. Congress did operate under self-imposed PAYGO rules during FY1991-FY2002, and frequently skirted them. The statute was then allowed to expire. So here we are with Mr. Obama paying lip service to fiscal disciple with yet another campaign speech.

Is it any wonder that the price of gold is at a record $1165 this morning?

Might the Bush tax cuts be repealed before 2011?

Nov 23, 2009 20:02 UTC

I have to admit, this scenario does make a lot of sense:

In a word, yes. Back in August 1993, President Clinton passed the largest tax increase in history – the Omnibus Budget Reconciliation Act of 1993 (OBRA) – and made it retroactive to January of that year.

It was challenged in court, and the court held that retroactive tax increases were legal. This was not the first time this sort of chicanery had been pulled. (You can read more on the topic of retroactive taxes by clicking here.)

Why am I so confident this trap is being set? Nancy Pelosi herself tipped her hand on the retroactive tax plan when she said last January she wanted Congress to repeal Bush’s tax cuts well before their scheduled expiration date. An early repeal of the Bush tax cuts was also one of President Obama’s campaign promises.

The administration and its allies have since gone quiet on its intentions. But that’s only because they want to avoid triggering a stock selloff before the end of 2009. That all changes once the ball drops in Times Square this coming New Year’s Eve. At that point, it will be too late to escape.

Me: Perhaps this is how Team Obama means to help pay for the second stimulus, assuming they don’t intend just to borrow it all.

Geithner Resignation Watch: Jamie Dimon Edition

Nov 23, 2009 17:19 UTC

Here is what I know, or at least what I think I know after talking with slew of folks today (and an expanded take to come in a bit):

1) Geithner isn’t going anywhere before November 2010.

2) JPMorgan’s Jamie Dimon doesn’t want the job.

3) If Geithner did go, Rahmbo, Yellen, and Summers are all more likely that JD.

4) The Geithner resignation talk is a sign of panic on the part of congressional Dems. Expect the AIG ruckus to get more of a push on the Hill.

5) Geithner’s uneven TV skills aren’t helping, though.

COMMENT

JAMIE DIMON WILL BE TAGGED A CROOK IN A VERY SHORT PERIOD OF TIME. HE IS GREEDY AND WILL GET CAUGHT!!
HE USES THE BANKS POWER TO OVERPOWER PEOPLE AND WASTES MONEY, HE IS KEN LAY JR,, JAN 22ND ,, WE WILL ALL SEE WHAT KIND OF GUY HE HIS AND HIS FAMILY.

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The Fed’s ‘crystal meth’ monetary policy

Nov 20, 2009 18:50 UTC

A classic from David Goldman:

The crystal-meth monetary policy at the Fed makes everyone feel better, until they don’t. The nonstop rise in the price of dollar hedges tells us that it can’t last forever. Large balance sheets attached to the Fed’s money pump can show profits, and the price of spread assets (as PIMCO’s Bill Gross keeps emphasizing) is stupid rich. But at the capillary level, through, the economy is dying and gangrene is setting in. … It isn’t just the 17.5% broad-measure unemployment number that we should worry about, but the massacre of smaller businesses, who are concentrated in the most vulnerable sectors: real estate, construction, and retail. Retail sales may get a temporary shot in the arm from cash for clunkers, and a combination of tax credits and (de facto) subsidized mortgage rates may hold up the bottom of the housing market for a short time. But today’s data show how fragile these matters are.

COMMENT

Monetary policy is one of the tools that a national Government uses to influence its economy. It is mainly used to low unemployment, low inflation, economic growth, and a balance of external payments.
http://www.mikeastrachan.com/

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6 healthcare taxes that violate Obama’s tax pledge

Nov 20, 2009 18:23 UTC

These seem pretty indisputable. From Keith Hennessey:

1. The clearest violation is the 5% excise tax on cosmetic surgery and similar procedures (including teeth whitening). I assume that cosmetic surgery and similar procedures are skewed toward the high end of the income distribution, but there certainly are many people getting these treatments with annual family income less than $250,000.

2. The bill would allow State insurance exchanges “to charge assessments or user fees to participating health insurers, or to otherwise generate funding, to support its operations.” [ §1311(d)(5)(A) ] Health insurers would pass these “assessments or user fees” through to consumers as higher premiums. This would affect anyone who buys health insurance, including those with family income less than $250,000.

3. The bill would impose a 40% excise tax on health coverage in excess of $8,500 (individuals) / $23,000 (families). While policies this generous are almost certainly skewed higher on the income distribution, there are definitely families with income less than $250,000 receiving these plans. Again, health insurers would pass these tax increases through to those families.

4. The bill would increase taxes on all health insurance plans, as well as on brand-name drugs and biologics, and on medical devices. These tax increases would affect anyone who buys these goods, even if their family income is less than $250,000.

5. According to CBO, “By 2019, … the number of nonelderly people who are uninsured would be reduced by about 31 million, leaving about 24 million nonelderly residents uninsured (about one-third of whom would be unauthorized immigrants.)” (p 8 ) These roughly 16 million people would pay “penalties” of $95 per adult in 2014, $350 per adult in 2015, and $750 per adult in 2016 and later. You’re charged half as much for each kid. Most of these 16 million people paying higher taxes will have family income less than $250,000 and will pay higher “penalties,” although not all will pay these full amounts.

6. The bill would create a new 0.5 percentage point increase in payroll taxes on individuals with incomes greater than $200,000 in 2013 and families with incomes greater than $250,000 in 2013. Since these amounts are for 2013 and not indexed, someone making $233K in 2009 would be affected by this in 2013, assuming 1% annual real wage growth and CBO’s assumptions about inflation. If you’re making $220K this year, you’ll probably be hit by the new tax in 2016. $210K this year, you first get bit in 2017, and so on.

COMMENT

In all honesty, until the politicians can put a dollar amount on a life (much less a dollar amount on quality of life), nothing but failure can come out of legislating budgets for life or quality of life.

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How the economy is killing the Obama agenda

Nov 20, 2009 14:00 UTC

The less popular Obama gets, the less political capital he has to push forward his agenda. I think this chart from Nate Silver nicely encapsulates things:

112009poll

On the calls for Timothy Geithner’s resignation …

Nov 19, 2009 19:56 UTC

If Republicans had any fear of the Obama White House on the economy, congressmen wouldn’t be calling for Tim Geithner to resign, much less right to his face as happened today. Then there is Peter DeFazio, the Oregonian Democrat, on MSNBC’s Ed Schultz show when asked if the treasury secretary should resign:

DEFAZIO: I do, especially if you look back at the AIG scandal and Goldmans and the others who got their bets paid off in full. Instead of saying, well, you bet, you lost, they got paid back in full with taxpayer money through AIG. We channeled the money through them.

Geithner would not answer my question when I said, “Were those naked credit default swaps by Goldman or were they a counter party?” He said, “I will not answer that question.”

I think they were naked credit default swaps. They were bets. They should not have gotten their money back.

SCHULTZ: So he‘s not coming clean with the Congress?

DEFAZIO: Absolutely not.

SCHULTZ: OK. So have you asked the Obama administration to remove him, or will you?

DEFAZIO: The populist caucus is considering questions regarding both him and some other members of the economic team in the near future.

This a sign that some Democrats do fear the Obama White House on the economy — they fear being too closely aligned with it. Look, the NJ and VA elections when combined with the high unemployment rate  are causing an absolute Dem freakout on Capitol Hill. Fun fact: Dems are defending 38 of the 50 most vulnerable House seats, as measured by the Cook Political Report.

COMMENT

Giethner defends naked swaps because he defends the status quo. That’s where his power base is. If congress is successful in providing meaningful reform Giethner will lose his advantage in dealing with the complex and corrupt financial system.

He’ll fight meaningful reform to the end. Because when it happens, he’ll be out of a job.

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.

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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