President Obama is wrong about not negotiating. He already is already negotiating. It's just that the position he's taking in the negotiation is that he won't talk to anybody. It's really that he's not talking to anybody *yet*. But he'll talk if forced to. He's a stubborn and power-loving lawyer, but not an idiot. If he takes this to the point of idiocy, it's up to Republicans to undertake a PR program to show it for what it is. Regardless of all the talking John Boehner and the Republicans are doing, it's not enough. Republicans are not pounding hard enough on the federal debt problem and its relationships with the shutdown, with excessive regulation, with the debt ceiling, and with Obamacare costs.
The President says he won't negotiate this way so as to not establish a pattern? The pattern is already established. It was started in 1995, was confirmed in 2011 and has already continued. Sorry, Mr. President, but brinksmanship, grandstanding, and legislative guns to heads is very much part of the pattern for both sides. So come off the pretend pedestal and get real.
It's a pretty sorry position for the chief executive in the executive branch to take. The executive branch should be herding the supposedly childish legislators to the table and keeping them talking and establishing priorities and negotiable items, the way it is said that LBJ did. If an executive does that, he/she can then say "See, I was a good executive and did everything I could to move the process forward, get the sides together and solve the problem." The President's chance to say that is already gone. He's been an obstructionist so far, and that's all.
Why Harry Reid and Barack Obama have not played any version of "Good Cop-Bad Cop" puzzles me. They're both willing to be seen as complete obstructionists. The key is making one of them feel enough heat that they're forced to talk to the sides and start some substantive deal-making.
In the present scenario the Republicans and John Boehner are missing opportunities to paint the President for what he is. However, it's a slightly long and complicated message. Some education of the electorate would be called for. It couldn't be done with one 10-second sound bite.
Of course John Boehner can be painted with the obstructionist brush also. But we should keep in mind what the mission is. The original mission is to slow down the rise in federal deficits and the accumulation of federal debt. And subsidiary to that is finding a way to stop or at least slow the damage of Obamacare.
The Democratic side says people like Obamacare. Well, yes, there are some good insurance rules and many givaways for consumers of medical services in the bill. Likewise there are government benefits in many other pieces of legislation. But the vote-buying and the handouts, if you will, are only half of the argument. The costs and inefficiencies to the economy, and forgone wealth and income creation, not to mention the future financial viability of the country and the by extension the world economy are on the other side of the argument. Just poll the Japanese and ask them if they wouldn't like to have seen some economic and banking decisions made differently starting in about 1989.
Again, the mission is based on the fact that the federal debt is too high, and it's rising too fast. And the projections for staying on this course show that this level of government is unsustainable.
That's for two key reasons. The debt cannot be allowed to rise to too high a percentage of GDP. Also, having fiscal policy very much out of sync with monetary policy creates market distortions, the effects of which are large, have long lags, and result in a lot of wealth and income not being created. But these last two issues have been explored by others and are widely known in reasonable economic circles.
The Democratic side essentially says Obamacare is law, it's court approved, the debate's over, let's move on, and we got our prize so keep your hands off it! Well, not so fast. Anyone who was paying attention as the law was being created and passed will recall that it was a highly flawed, and I would observe actually dishonest affair.
A low point was when then-Speaker Nancy Pelosi famously said "We have to pass the bill so that you can find out what is in it - away from the fog of the controversy." She wasn't referring to San Fransisco bay fog, but to DC fog. The catch is that the controversy was legitimate. The bill was rammed through the process.
The vote should have been held up, and time provided to read the bill and debate its points. Then the proper conferences should have been held to either craft something that was financially sound and market-oriented enough for Republicans to support or to kill the bill in that congress. Harry Reid and Nancy Pelosi may have to answer for their effective but defective guidance of the legislative process some day. I hope they do.
Later the Supreme Court gave Obamacare a pass, but with a wink and a kicker. The kicker essentially said that the law stinks but that the problem must be solved legislatively.
Which brings us to the present standoff.
Showing posts with label stimulus. Show all posts
Showing posts with label stimulus. Show all posts
Monday, October 7, 2013
Monday, December 31, 2012
Balance? We're nowhere near it! Lower Spending!
When you're in the situation pictured below, you take some boxes off the cart. You don't go get a bigger donkey! Cutting spending is like removing some boxes, of course. Increasing taxes resembles getting a larger donkey, and also has a suspicious resemblance to getting more of our present government.
So the question is Balance? Taxing versus spending balance? We're so far from that, it makes a mockery of the word. While others debate 3 dollars of spending cuts for 1 dollar of tax increases, I think it should be somewhere above 10 dollars of spending cuts for each dollar of tax increases. That's if it's not all spending cuts, pure and simple. Government spending simply needs to be a smaller percentage of GDP. As Speaker Boehner's recent spending chart showed, spending is the problem, not taxation.
The problem with the taxation side is that we're taxed enough already. Yes, that spells TEA, as in TEA party. The meaning of the phrase "TEA party" has evolved quite a bit since it first emerged. It's had a lot of help in that evolution from people who neither like nor understand what it stands for.
By what measure are we taxed enough already? A good measure is whether the level at which entities in the economy are taxed, cause them to alter their behavior significantly to avoid taxes. Of course, rational economic actors will alter their behavior at any level of taxation, from a little to the truly crippling. That's the foundation of the saying "tax anything and you'll get less of it!" But above significant behavioral changes, markets get so distorted that people's wealth is reduced and overall economic performance suffers.
Back to balance. I'm with CNBC's Rick Santelli on balance. For another illustration see his videos using watermellons and a pea as props to illustrate how little Congress is dealing with the spending side of this "balance".
Thursday, August 4, 2011
Markets Down Hard, Debt, and Obamanomics
I haven't written here in my blog in a long time. But I've been watching the economic scene. And as you might imagine I've been quite unhappy with our President, his administration, and the results of their economic policies. Here in California the effect is magnified and made even worse.
I see these factors holding back the U.S. economy:
The pundits' observations I thought most valuable were that the market's fall is not about the U.S. debt deal, but about Euro-zone debt worries, and the growing perception that the U.S. economy is not growing fast and may actually fall into a "double-dip" recession. We'll see what actually happens, but though I've searched and listened to truckloads of commentary, I don't see a catalyst for U.S. growth. Yes, there are some sectors that should grow, and yes, the middle classes may be growing in China and India. But in our present trade environment we can't take proper advantage of it.
Obama said one correct thing, as far as the basic concept. He said Congress should approve the 3 or 4 international trade agreements in its queue. Now the agreements are forgotten and Congress has flown out of town for a month. The trade agreements would be one small catalyst for growth.
Hedge fund manager Phil Falcone was interviewed today on CNBC, mostly about his LightSquared network. In it he said that innovation was the only way for the U.S. economy to get going and grow again. I agree with him.
And what stands in the way of that innovation, or would foster the economic growth we all want (well, everyone except a few Luddites of various stripes)? In short, Obamanomics stands in the way of the innovation Falcone mentioned. Instead, for growth we should be repealing the laws, throwing out, simplifying, and rationalizing the regulations, and basically undoing all we can of the four factors listed above.
As an aside, during the Reagan administration, he said that he would reduce government employees by a significant amount. One evening I was looking up at the federal office building in West Los Angeles and doubted anything would happen. A very few years later the building was 40 or 50% vacant, if I recall correctly. I was very happy to see that Reagan did what he said he would do. Today the size of government employment has grown past any nightmare Reagan ever had. It's time to slim down again. The regulations and other scribblings of the bureaucrats are not needed. In fact, they're harmful.
Again, the bottom line is "back to free markets" to create the growth and jobs we need.
I see these factors holding back the U.S. economy:
- Debt
- The effects of some misguided corporate rescues
- Market and corporate uncertainty caused by government actions, discussions and personnel appointments
- Present and expected future avalanches of regulations
The pundits' observations I thought most valuable were that the market's fall is not about the U.S. debt deal, but about Euro-zone debt worries, and the growing perception that the U.S. economy is not growing fast and may actually fall into a "double-dip" recession. We'll see what actually happens, but though I've searched and listened to truckloads of commentary, I don't see a catalyst for U.S. growth. Yes, there are some sectors that should grow, and yes, the middle classes may be growing in China and India. But in our present trade environment we can't take proper advantage of it.
Obama said one correct thing, as far as the basic concept. He said Congress should approve the 3 or 4 international trade agreements in its queue. Now the agreements are forgotten and Congress has flown out of town for a month. The trade agreements would be one small catalyst for growth.
Hedge fund manager Phil Falcone was interviewed today on CNBC, mostly about his LightSquared network. In it he said that innovation was the only way for the U.S. economy to get going and grow again. I agree with him.
And what stands in the way of that innovation, or would foster the economic growth we all want (well, everyone except a few Luddites of various stripes)? In short, Obamanomics stands in the way of the innovation Falcone mentioned. Instead, for growth we should be repealing the laws, throwing out, simplifying, and rationalizing the regulations, and basically undoing all we can of the four factors listed above.
As an aside, during the Reagan administration, he said that he would reduce government employees by a significant amount. One evening I was looking up at the federal office building in West Los Angeles and doubted anything would happen. A very few years later the building was 40 or 50% vacant, if I recall correctly. I was very happy to see that Reagan did what he said he would do. Today the size of government employment has grown past any nightmare Reagan ever had. It's time to slim down again. The regulations and other scribblings of the bureaucrats are not needed. In fact, they're harmful.
Again, the bottom line is "back to free markets" to create the growth and jobs we need.
Wednesday, April 15, 2009
T.E.A. Party Day
Hooray for the Tea party organizers. I'm going to my local Tea party today to see what happens.
The stimulus bills and associated pork may have been the catalysts for the Tea party movement. However the larger and longer term issue is the growth of government spending as a percentage of GDP. That is bad, on top of all the other reasons, because a dollar cycled through the government has a lower multiplier than a dollar kept circulating in the private sector. That subject is explored in detail in any good first- or second-year economics course.
For those that don't care about wealth, or want to lower it, the lower multiplier is not a problem. For the rest of us it's a key issue, even if it's not usually argued in those terms.
So I'm off to my local Tea party. Here's an article that surveys the Tea party phenomenon.
http://online.wsj.com/article/SB123975867505519363.html
The stimulus bills and associated pork may have been the catalysts for the Tea party movement. However the larger and longer term issue is the growth of government spending as a percentage of GDP. That is bad, on top of all the other reasons, because a dollar cycled through the government has a lower multiplier than a dollar kept circulating in the private sector. That subject is explored in detail in any good first- or second-year economics course.
For those that don't care about wealth, or want to lower it, the lower multiplier is not a problem. For the rest of us it's a key issue, even if it's not usually argued in those terms.
So I'm off to my local Tea party. Here's an article that surveys the Tea party phenomenon.
http://online.wsj.com/article/SB123975867505519363.html
Friday, January 30, 2009
Obama Starts Down the Dreaded Path
Here a some beefs I have with President Obama's and the Democratic majority's recent actions and positions.
1) The so-called stimulus bill is full of pork. I'm hearing about more items all the time that sound more like ornaments on a Christmas tree of pork than elements of a well-thought-out and effective stimulus bill.
2) The stimulus bill is too light on tax cuts and too heavy on spending. I'll detail why tax cuts are more effective in a later post.
3) The Columbian Free Trade Agreement isn't passed yet. Remember this? It still matters. The U.S. so far has failed to lock in free trade and economic recovery advantages and the drug war advantages of passing the FTA. Stratfor and other sources have warned about Mexico's dire straits. We need to watch our southern border closely.
4) There's a "buy American" clause in the stimulus bill. It's nonsense to codify that in a bill. If a private party wants to pursue a buy America ad campaign that's fine. But massive sellers of treasury notes and the beacon of democracy and free markets, not to mention chief advocate of free trade, can ill afford to do this. It's stupid and economically wrong.
5) The Obama administration naively stated the obvious about China's handling of its currency relative to the dollar. Of course they manipulate it. It's officially pegged, after all. It doesn't even pretend to float in a free market relative to the dollar. But it was a stupid thing to say so. To do so within a week of the passage of a giant spending bill to be financed by government borrowing was a whopper. The Chinese have good reason to fear sanctions and legal consequences if what they are doing is called what it is. And of course a backlash to those actions would hit us. Hard. Please guys, try to act sophisticated even if you aren't. The U.S. and China are in a dance together and it will take at least another generation to unwind things enough to be free-market rational.
6) The "Card Check" pro-union bill lurks in the halls of congress. The election mechanism is un-American and I would think it would be unconstitutional. I'd have to look. The bill will also advance the government's role from referree to dictator of terms after a set time period of negotiations between a company and a union. That's bad on several levels. More on this later. For some detail see today's editorial page in Investor's Business Daily.
7) Obama signed the "Lilly Ledbetter" bill. That's a bill that sounds appealing to people who think with their hearts instead of their brains. But it sets up some incentives and legal mechanisms which will be abused, to the short-term detriment of businesses and the long term detriment of employees.
8) Closing Gitmo? Dumb. Castro's already making hay, and that's before we've let anybody out! We close Gitmo and celebrate only after we're out of Iraq and Afghanistan, UBL is proven dead, al Queada is discredited and dismantled, Iran has been shorn of nukes, the Isreal-Palestinian question has been resolved to the degree that Palestinians move forward economically instead of work to dismantle the present situation, and Hamas and Hesbollah in their present forms are nothing but bitter memories.
My relief at the perceived quality of Obama's cabinet picks is giving way to the forlorn environment I feared before Obama was elected.
1) The so-called stimulus bill is full of pork. I'm hearing about more items all the time that sound more like ornaments on a Christmas tree of pork than elements of a well-thought-out and effective stimulus bill.
2) The stimulus bill is too light on tax cuts and too heavy on spending. I'll detail why tax cuts are more effective in a later post.
3) The Columbian Free Trade Agreement isn't passed yet. Remember this? It still matters. The U.S. so far has failed to lock in free trade and economic recovery advantages and the drug war advantages of passing the FTA. Stratfor and other sources have warned about Mexico's dire straits. We need to watch our southern border closely.
4) There's a "buy American" clause in the stimulus bill. It's nonsense to codify that in a bill. If a private party wants to pursue a buy America ad campaign that's fine. But massive sellers of treasury notes and the beacon of democracy and free markets, not to mention chief advocate of free trade, can ill afford to do this. It's stupid and economically wrong.
5) The Obama administration naively stated the obvious about China's handling of its currency relative to the dollar. Of course they manipulate it. It's officially pegged, after all. It doesn't even pretend to float in a free market relative to the dollar. But it was a stupid thing to say so. To do so within a week of the passage of a giant spending bill to be financed by government borrowing was a whopper. The Chinese have good reason to fear sanctions and legal consequences if what they are doing is called what it is. And of course a backlash to those actions would hit us. Hard. Please guys, try to act sophisticated even if you aren't. The U.S. and China are in a dance together and it will take at least another generation to unwind things enough to be free-market rational.
6) The "Card Check" pro-union bill lurks in the halls of congress. The election mechanism is un-American and I would think it would be unconstitutional. I'd have to look. The bill will also advance the government's role from referree to dictator of terms after a set time period of negotiations between a company and a union. That's bad on several levels. More on this later. For some detail see today's editorial page in Investor's Business Daily.
7) Obama signed the "Lilly Ledbetter" bill. That's a bill that sounds appealing to people who think with their hearts instead of their brains. But it sets up some incentives and legal mechanisms which will be abused, to the short-term detriment of businesses and the long term detriment of employees.
8) Closing Gitmo? Dumb. Castro's already making hay, and that's before we've let anybody out! We close Gitmo and celebrate only after we're out of Iraq and Afghanistan, UBL is proven dead, al Queada is discredited and dismantled, Iran has been shorn of nukes, the Isreal-Palestinian question has been resolved to the degree that Palestinians move forward economically instead of work to dismantle the present situation, and Hamas and Hesbollah in their present forms are nothing but bitter memories.
My relief at the perceived quality of Obama's cabinet picks is giving way to the forlorn environment I feared before Obama was elected.
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