James Pethokoukis

Illinois, a kleptocracy in action

January 14, 2011

What should America do about its troubled economy? Sometimes the real world provides the best laboratory for political and economic experiments. Democratic capitalism vs. totalitarian communism? One quick look at East Germany and West Germany in the 1980s or North Korea and South Korea today provides easy analysis of which is the preferable way to create and organize a peaceful and prosperous society.

More questions on U.S. credit rating from Moody’s, S&P

January 13, 2011

Once again, S&P and Moody’s are raising question about America’s creditworthiness (via the WSJ):

Does Bill Daley appointment further enshrine Too Big To Fail?

January 11, 2011

Cato’s Mark Calabria thinks the problem is not people but policy:

MIT Professor Simon Johnson recently argued that Bill Daley’s appointment as Obama’s Chief of Staff signals that “too big to fail”, as it relates to our largest financial institutions, is here to stay. Personally I never thought it was in doubt. With Geithner at Treasury and Dodd-Frank further codifiying “too big to fail”, its been clear for sometime that the bailout net is larger than its ever been, and is not being pulled back.

Is America growing politically unstable?

January 10, 2011

Is America becoming less politically stable? A glance at some foreign newspapers would certainly give that impression. This is an important economic question. The global primacy of Treasury bonds and the dollar stems mostly from the nation’s massive economic might. But confidence in U.S. political stability also plays a role. The shooting of Arizona Congresswoman Gabrielle Giffords, though tragic, shouldn’t alter those perceptions — unless freedom of speech suffers.

GOP to spendthrift states: The check will never be in the mail

January 7, 2011

Exactly a month ago, I wrote a piece on a  “secret GOP plan” to nudge fiscally troubled states in bankruptcy, giving their governors a chance to rewrite existing public employee union contracts and take other drastic measure to restore solvency. Step 1: Eliminate the Build American Bond subsidy to make it hard for states to borrow.  [DONE] Step 2: Force states to reveal the true extent of their pension liabilities. [COMING SOON] Step 3. Rewrite the federal bankruptcy code [COMING SOON]. Two recent events give me further confidence in my call:

The tax deal and Obama’s reelection chances

January 5, 2011

It looks like Robert Gibbs will be leaving the White House to run his own consultancy and work on Obama’s 2012 campaign. Ruy Teixeira, a politics guys not an econ guy, thinks the Obama-Republican tax deal makes it far more likely that campaign will be a successful one:

Bill Daley to the White House? Business would love it

January 5, 2011

If President Barack Obama chooses JPMorgan executive William Daley as his next chief of staff he could at last build bridges with the disgruntled U.S. business community, both on Main Street and Wall Street. Daley’s pro-trade views are a big reason the buzz around his potential nomination is so loud. The pick would also bode well for reaching deals with Republicans on taxes and spending. A few observations (via my column for Reuters Breakingviews):

‘Cut and grow’ is really the only way forward

January 4, 2011

In theory, at least, the House GOP is exactly right:

The new House Republican majority will use the three weeks before President Obama’s State of the Union address to repeal the healthcare law, cut spending and scrap federal regulations, incoming Majority Leader Eric Cantor  (R-Va.) said Tuesday.

Of debt ceilings and budget deals

January 4, 2011

There’s a big budget deal coming, says NRO’s Daniel Foster:

My argument is dead simple.

P1) The debt ceiling won’t be raised without a ‘yea’ vote from Sen. Lindsey Graham (R., S.C.)

Bill Daley as Obama’s new chief of staff?

January 4, 2011

That is the buzz. But it is more than just buzz. My sources tell me that serious conversations are being had, though it is not a done deal. Certainly the business folks I have chatted with would be delighted. Forget about Valerie Jarret. When a top CEO had an issue, he or she would be calling Bill Daley from now on, not Jarrett. Daley would be “their guy.” (And I would also call Gene Sperling the frontrunner to replace Larry Summers.)  Here is the Reuters take: