Economic Policy


It is hard for me to understand how anyone can seriously blame President Obama for our current economic mess.  We are still living out the consequences of Bush era foreign and economic policy.  The real folly, however, is in thinking that the Republican Party is the party to extract us from our mess.  With a few notable exceptions, like the weaker-than-it should-have-been Democratic stimulus bill, the failure of Obama policies to work can be largely blamed on the Republican Party which at every turn has said “NO” to anything proposed by the President.  You see, the reality of American politics today is that the interest of your political party comes before country.  President Obama succeeding with economy would decrease the Republican Party’s chance of winning the next election.  The calculus is that simple.

Along these lines, there’s good opinion piece in the Washington Post today contrasting the disconnect between voters support for Obama economic initiatives and their blaming of Obama for our economy’s ills.   The real blame lies with the Republican Party, past, present and future.  America needs to wake up, before it’s too late.

The piece by Greg Sargent is entitled: The big disconnect: Strong disapproval of Obama on economy, solid support for his actual policies.

 

 

I’ve been a Republican all of my life.  While still registered as such, it is clear I have ceased to belong in the party.  Once a party I respected deeply for it’s common sense on economic, energy, labor, foreign policy and national defense issues, it is now the party of make believe, especially when it comes to tax and economic issues.  The “compromise” it forced over the weekend was no compromise, it was “our way or we destroy the economy”.  Unfortunately, it looks like the bill that finally passed will do great damage to the economy anyway — the compromise being about as non stimulatory as it could possible have been to an economy teetering on the edge of another recession.  Congratulations GOP.  I personally hope you see a loss in November of 2012 of stunning proportions.  You deserve it.  You deserve it badly.  I will work hard to make it happen.

Also, for those of you on Facebook, please consider “liking” both my “What Should Be” page and my “Just Say No to Republicans” page.

On December 1, 2010, the President’s National Commission on Fiscal Responsibility and Reform issued its report.  The Washington Post reported just a few minutes ago that at this morning’s meeting of the commission that commission members voted 11-7 in favor of the report, 3 votes shy of the number that would have forced congressional consideration of the report.  Still, this final vote was far larger than many expected.

Clearly, something has to be done.  It also appears that the necessity of action has finally cracked the national consciousness and it’s going to be hard for Congress to ignore (see David Broder’s piece in the Washington Post this week entitled A bipartisan end to fiscal denial).  This is very good news.  It’s also good news that there was support on the commission from both the left (Senator Durbin) and the right (Senator Coburn).  The support appears enough to be able to get the ball rolling.  I particularly applaud Senator Coburn for his vote — it shows a courageous politician in a time when such courage appears in very short supply.

On the subject of the Deficit Commission’s recommendations are two pieces in this morning’s Washington Post.  One is an Op-ed entitled Saving the American Dream by Senator Judd Gregg.  The other, and a more important read, is Steven Pearlstein’s We need a grand compromise on the deficit, not hyperbole.  I am in strong agreement with Mr. Pearlstein’s remarks, with the exception of Pearlstein’s endorsement of an amended plan offered by Andy Stern, a former president of the Service Employees International Union who as a member of the commission who voted “no” this morning.  I am not familiar with Mr. Stern’s alternate proposal.

What I know is something has to be done.  With the majority proposal released this week and the ideas that have already been put on the table by others, including those of the Domenici-Rivlin Task Force of the Bipartisan Policy Center, the ideas are out there.  It is time for Congress to act.  As pointed out by Mr. Erskine this week, and reported by Mr. Broder in the link to his Op-ed above, “the era of deficit denial in Washington in over”.  As pointed out by Mr. Pearlstein, the economic imperative in clear, both in terms of the country’s long and short-term economic future.

Let’s get on with it.

On March 3, 2009, I penned a weblog piece entitled A Liberal Ronald Reagan? In the piece I made the following observation:

Having last week finally seen the complete unveiling of Barack Obama–no, not a centrist but a true blue Democratic liberal–it is interesting to speculate on how the American public is ultimately going to judge its new leader.  The 2010 mid-term elections will give us a first indication.

Well, we’ve received our first indication of the American public’s judgement on our new leader and it is not good.  Anyone who says this isn’t reflection of the country’s views on President Obama’s first two years in office is smoking something.

Yet all is not lost.  This election may have been a blessing in disguise as it now puts President Obama in a position much more similar to that faced by the very popular Ronald Reagan.  As I point out in my piece, this will improve Obama’s chances of long-term success considerably.  Reagan was aided by not being able to be as conservative as he might otherwise have been and Obama will likewise be aided by his inability to follow a course more liberal that the country desires.

Make no mistake that I want President Obama to succeed.  The country needs him to succeed.  But he must slow the implementation of “the agenda”.  He took a massive gamble (see Obama the Gambler) and lost.  He must go back and focus on the economy and get that right and put utopian liberal dreams on hold, maybe forever.

Having re-read A Liberal Ronald Reagan? this morning I also became aware that I was mistaken about Obama’s skills as a communicator.  I had thought based on his performance in the election campaign that, as a communicator, he was almost an ideologically liberal clone of Ronald Reagan.  Yet it is now apparent Obama does not possess all of the communication skills of the “the great communicator”.  The one thing I’ve most noticed of late is that Obama doesn’t have that spark of personality that so endeared Reagan to America.  Obama projects dreadful seriousness all of the time.  He is tough not to respect but he is hard to really like.  I think he can work on that.  We need to see the likable side of the President more.

Let me close with the same words that closed my original piece two years ago.  They are, if anything, even more relevant.

The bottom line is that this story has yet to unfold.  It could go in many ways.  It will interestingto watch.  It will also be scary, as the country has so much at stake.  Had this been normal times, with an economy that was anywhere withing the range of normal, this liberal experiment that Obama’s proposing might have been an interesting and valuable exercise for the country.  In times of economic crisis, it seems rash and dangerous.  Let’s hope for the best case scenario, for failure could be unthinkably bad.  Let’s hope that Barack Obama does, indeed, turn out to be a liberal Ronald Reagan.

When Steven Pearlstein of the Washington Post speaks, we are wise to listen.  His business commentary is distinctly non-partisan and filled with common sense observations about the state of our economic world.  His piece today in the Washington Post is another must-read.  It is entitled Keeping an open mind on solutions to the budget deficit.

Maybe this is why I’m a Republican.  I have a healthy distrust of government when it comes to finding new ways of taxing its citizenry so that the government can allocate (spend) those resources instead.  While I think Republicans have gone significantly overboard in their opposition to tax increases and support for most tax decreases, Republican distrust of government distrust of public spending at the expense of private spending is fundamentally healthy.

While I reserve judgment on President Obama’s newest plan to raise taxes–his plan to raise $210 billion from “curbing offshore tax havens and corporate tax breaks”–I have suspicions that it but the move of dedicated big spender seeking new sources of revenue to fund his expansive federal social agenda.  The story can be found in the New York Times’ Obama Asks Curb on Use of Havens to Reduce Taxes.  It is the source of the quotation above. 

I’m not going to say much more.  I don’t know enough about the details, but I am suspicious.  This proposal needs thorough vetting on Capital Hill and elsewhere.  There is much we all need to learn about the pros and the cons of the proposal before we make it law.    

There is a must-read opinion column in the Washington Post this morning by Robert J. Samuelson.  It’s entitled The Bias Against Oil and Gas.  It is spot-on.

Energy is critical to the healthy functioning of the U.S. economy.  It is, therefore, a crucially important issue for President Obama to get right–to address in a rational manner.  The point here is that Obama’s “bias” against oil and natural gas will have consequences.  These consequences include failure of his “energy policy” and quite possibly failure of his economic policy upon which so much, even rhetorically, rides on the over-estimated potential of renewable energy.  Worse yet, it means that Republicans may be handed an issue, when oil prices once again soar (and oil prices will again soar, trust me), that gets them re-elected before they deserve to be.  The loser will be the country.

The point here, and I am certain the prime motivation behind Mr. Samuelson penning the piece he did, is that there is time to correct course.  There is still time to get it right.

There are a couple of reasons in particular why someone as brilliant as Mr. Obama has gotten this issue so terribly wrong.   One, and at the top of my list, is that our president doesn’t really understand energy policy.  This is understandable.  Although Illinois is an oil and natural gas producing state, it is not Texas.  While once a significant producer, Illinois’ production has declined and oil’s economic significance to the state is limited.  Additionally, spending a career in Chicago and so little time as a Senator representing the entire state, President Obama has had little opportunity to be educated.  Thus he, like most Americans, has learned about energy not by first hand experience but by what he’s been informed about energy, and particularly about oil and natural gas, by popular culture.  Popular culture tells us that oil is dirty and is bad for people and the planet and the way to move ahead is to not drill any more dirty oil wells.  It tells us that solar and wind are clean and abundant and we must only try harder and that will be our future.  As nice as this sounds, however, it is myth.

Another reason Obama has this wrong is alluded to in Mr. Samuelson’s column.  It is the power of the environmental groups and the fact, quoting Mr. Samuelson that “[t]o many environmentalists, expanding fossil fuel production is a cardinal sin.”  Given that environmental groups are an important contituency of the Democratic Party, Democrats are loathe to challenge its orthodoxy.  Yet a rational energy and economic policy demands a overt challenge.  Unless challenged it will lead the country down a path that does not lead to energy self-sufficiency.  It will lead to even more oil imports in the years ahead.

Expanding domestic oil production is not inconsistent with our country’s, and the world’s need, to limit the burning of fossil fuels in the years ahead.  That need is properly addressed through legislation that will begin to put a cost on the burning of fossil fuels so as to discourage its use.  In the meantime, the goal of this country needs to be moving as much production as it feasibly can back to this country.  We must never lose sight that every barrel not produced at home will otherwise have to be imported.  And every barrel of oil imported amounts to hundreds of billions of dollars and thousands of jobs going overseas.

Energy and economic policy will only work if built on a rational foundation.  It is time to re-lay the footings and begin to construct an energy policy that has architectural grounding.   

 

I don’t always agree with the New York Times’ Paul Krugman, as regular readers of this blog will know, but I must say there was little in his column yesterday about the Republican Party with which I could find much to disagree.  The piece is entitled Tea Parties Forever.  What is this thing about tea parties anyway?  It seems completely nuts to me.

Here are some of Krugman’s observations (in quotes) with which I’m in complete agreement interspersed with my own observations: 

“Today’s GOP is, after all, very much a minority party.”  Indeed it is, and getting smaller all of the time.  As crazy as they are, Republicans “could still return to power if the Democrats stumble.”  All too true.  A reason for Obama to moderate and not give them the fuel that will need to power an electoral victory.  “[E]verything that critics mock about these [tea] parties has long been standard practice within the Republican Party.”  True enough.  As indicated above, I don’t get the Republican preoccupation with taxes.  I haven’t for a decade or two.  “Then there are the claims made at some recent tea-party events that Mr. Obama wasn’t born in America… Crazy stuff.”  Yes, indeed.  “For now, the Obama administration gains a substantial advantage from the fact that it has no credible opposition, especially on economic policy, where the Republicans seem particularly clueless.”  It is a huge advantage to have no credible opposition to call you on your misstatements and misrepresentations.  Instead, we have a party that is beyond clueless, which makes even greater misstatements and misrepresentations.  Instead of offering genuinely believable, cogent and economically supportable policy alternatives, they advocate complete nonsense. 

No, this is not a Republican Party with which I can identify.  For the time being I’ve given up even trying to steer it back on course.   It’s hopeless.  The only thing that’s going to work is for the party to lose a few election cycles, maybe the next five.  Let’s just hope circumstances don’t allow them a premature win.  The country can’t afford this present Republican Party in charge again.     

There is an excellent Op-ed in today’s Washington Post entitled Weakening A Market Watchdog: An Accounting Rule Change’s Real Costs.  The author laments the interference of Congress in the independent and sound regulation of our banks.  Specifically, he discusses the political pressure that has been applied to an independent entity to change “mark to market” rules.  He suggests that this pressure, if heeded, is dangerous precedent.  Levitt makes a powerful case that both the present instance and the likelihood that other regulatory bodies will be forced to capitulate to political pressure bode poorly for the future.  It’s not good news for the American investor that independent bodies and regulatory agencies can be coerced by politicians.  I am persuaded and recommend the piece highly to readers.  

There are two columns in today’s Washington Post that continue the debate about the wisdom of Congress’s plan to retroactively tax bonuses paid to companies receiving financial assistance from the U.S. government under its Troubled Assets Relief Program (TARP).  Anyone who’s been reading my postings of the last several days will know my views on the subject.  The two Post columns go further than the AIG bonus debate, however, and lodge more broadly substantial criticism of Congress and the Administration.  The perspectives come from the right, George F. Will, and the center-left, Richard Cohen.  There is much truth in both columns, which is to say, again, that I am in substantial agreement with both.  While one expects a strong critique from Will, one does not expect it from Cohen, making it all the more salient.  He is critical, although subtly, of Nancy Pelosi, acknowledging clear strengths but pointing out clear dangers to the President of abdicating too much control to her. 

I continue to believe that unless reined in, Nancy Pelosi and her left-leaning cohorts have the potential to sink Mr. Obama.  Cohen, citing Charlie Cook, concludes that Obama is beginning to slip in the polls, with a notable loss of independents.  The loss of political independents is a bad sign.  (The Cook column, Are Independents Hedging Their Bet?, from which Cohen apparently got his information is a most valuable-read.)  It is a sign of a backlash against liberals.  It is a sign of the country beginning to see merit in divided government.  For Obama, it signals that he needs to control the Pelosi House of Representatives in order to stave off a Republican resurgence in the next election.  That’s what many of us thought that was one of the reasons that Obama selected Rahm Emanuel as his chief of staff — to keep Pelosi and the House under control.  Well, he clearly hasn’t been doing it.

The George Will column is entitled The Toxic Assets We Elected and the Richard Cohen piece, With Friends Like Pelosi…     

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