Free Markets, Free People

Economy

Warren Buffet – Bank Levy Makes No Sense

Barack Obama was quite fond of quoting Buffet during the campaign. My guess is he’ll not be as willing to quote Buffet about his opposition to the President’s proposed bank tax:

“I don’t see any reason why they should be paying a special tax,” said Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., in an interview on Bloomberg Television today. Supporters of the plan to tax the banks “are trying to punish people,” he said. “I don’t see the rationale for it.”

What he’s talking about, of course, is the tax Obama has proposed ostensibly to recover the losses incurred in the TARP program. Obama has targeted about 50 banks to make this repayment.

The levy would apply to firms with more than $50 billion in assets, including Wells Fargo and Goldman Sachs, two companies that Berkshire has investments in. It would exclude Fannie Mae and Freddie Mac, the government-sponsored mortgage lenders taken over by the U.S.

Look at the damage Fannie and Freddie caused, and they were run by the Congress,” said Buffett. “Should they have a special tax on congressmen because they let this thing happen to Freddie and Fannie? I don’t think so.”

Of course Buffet throws out a point, which I’ve put it bold, that the administration, Democrats in general and the media have studiously avoided. That’s the role that the two quasi-governmental organizations, Freddie Mac and Fannie Mae, played in the financial meltdown (and how much of the TARP money they sucked down). In fact, the tax is as much about recovering the money they required as anything. But pointing that out would be detrimental to the narrative the administration has been building about the “greed of Wall Street” and their unilateral culpability. According to Bloomberg data, Freddie and Fanny owe about $110 billion. Buffet, of course, is not so easily fooled:

The levy would apply to firms with more than $50 billion in assets, including Wells Fargo and Goldman Sachs, two companies that Berkshire has investments in. It would exclude Fannie Mae and Freddie Mac, the government-sponsored mortgage lenders taken over by the U.S.

“Most of the banks didn’t need to be saved,” Buffett said. “Including Wells Fargo.”

The bank tax would raise $90 billion over 10 years and, of course, be paid for by the banks customers. Also note that the sum of $90 billion is very close to the amount owed by Freddie and Fanny.

Obama is correct – “we want out money back”. But we want it back from the institutions which wasted it. Of course that’s impossible since taxing Freddie and Fanny is taxing ourselves. Of course, so is taxing banks. However, it is much more useful to demonize them, play the greed card and pretend the government is blameless than to tell the truth, isn’t it?

I mean, if they told the truth, they’d have to implicate Congressional Democrats like Barney Frank, wouldn’t they – and that would never do.

~McQ

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On The Left: Who Are The Nihilists?

Andrew Sullivan (or one of the Andrew Sullivans), supposed “Republican” – or is it “libertarian”, I forget – has a post today in which he highlights a liberal reader’s lament.  It’s essence, of course, is this is all Bush’s fault and, for heaven sake, how can you expect the grand and wonderful Obama to have fixed his mess in a year?

Well, here’s a suggestion – how about by focusing on the problem instead of wandering off in other directions. The commenter centers his or her comments on the fact that they’re unemployed and their COBRA benefits are fast running out. And, of course, he or she has a preexisting condition. So the priority is to pass health care?

Really? Is it? Or is it to get that person back on a job?

That, of course, is the argument, isn’t it? And all the whining and crying about Bush, etc. won’t change the fact that the majority of all the problems now facing the country are best addressed by getting the economy moving. Tax cuts for business, policies that provide incentives for businesses to expand and hire – that is where the government’s energy should be focused. Not on ancillary issues that cost trillions and don’t even kick in for 4 or 5 years. Sullivan’s commenter acts as though getting this health care bill through will save them when their COBRA runs out in 5 months. Not even close.

Business is sitting on the sidelines afraid to expand or hire because of the unsettled business environment. They have no idea what this health care bill will cost them in marginal taxes, so until that becomes clear, why would they hire? Shelving or killing this health care monstrosity would actually help the employment situation. Immediately. Same with cap-and-trade.

The argument, which so enrages this commenter, is taking place now in a series of special elections. And what further enrages this commenter is his side is losing that argument. The answer then is to characterize those who oppose the direction this country is taking as “nihilists”. Nihilists?

I have to wonder if either Sullivan or the commenter understand the word? I’m more inclined to believe that it is instead used like “fascist” to really mean “anyone who disagrees with me”. But for your edification, here’s how nihilism is defined:

1. One who advocates the doctrine of nihilism; one who believes or teaches that nothing can be known, or asserted to exist.

2. (Politics) A member of a secret association (esp. in Russia), which is devoted to the destruction of the present political, religious, and social institutions.

Those definitions really don’t support the commenter’s premise. In fact, it is the contention of those with whom the commenter is so upset that this administration and the Democrats are engaged in the second definition of “nihilism” with a vengeance. “Libertarian” or “Republican” or whatever he is today Sullivan ends his post with:

For Gods sake, vote for Coakley. Not for Coakley. For the rest of us.

Which brings me to a second blogger who also discusses the Sullivan post and agrees with the lament (and, I would suppose, the characterization of those opposed to the government takeover of health care as “nihilists”). Nothing particularly compelling in his discussion until you get to this part:

It is at moments like this that I wish we had an authoritarian ruler who could take over for a few years, a clear-headed liberal in the classical sense who could ram things through and get them done without giving a thought to the shrieks and cackles of the deranged fringes of either side. It’s at moments like this when I think, “The USA could use a little China, or at least a little Singapore.” A benevolent despot who can engineer solutions and force them to happen.

Holy liberty loving Hannah.

How about a little USSR? A dab of Cuba? Some of Pol Pot’s Cambodia for leavening?

I’ve come to the conclusion that most of the left are closet authoritarians who, at the drop of a hat, would resort to what this blogger describes if they could get away with it, always with the naive belief that this dictator would be “a benevolent despot”. Of course, as pointed out previously, definitions mean little to the left who apparently don’t realize that “benevolent despot” is an oxymoron of the first degree.

The hidden desire in Sullivan’s last line – a fulfillment of the latter bloggers wish – is a vote to maintain the filibuster proof Senate with the authoritarian power to thwart the minority and ram through what the elite think we should have. Who care what the “nihilists” in flyover country want or don’t want. “The USA could use a little Cuba China” afterall.

~McQ

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So Let’s Say Scott Brown Wins …

I’d say, given all I’ve read and heard pertaining to the polls, that a win by Brown in today’s special Senatorial election in Massachusetts is a pretty solid prediction. But polls have been wrong before. With that said, I think he will pull it off even if only by a point or two.

So what can we expect if that’s the case. 364 days after Barack Obama took office and in what Democrats figured was their seat forever given it had belonged to the “Liberal Lion” of the Senate in deep blue and solidly dependable Massachusetts a Republican wins the seat?

What will be the reaction and what are the implications?

According to Politico, President Obama’s reaction to such a win will be to “fight hard”. Nice words for a pep rally.But if Brown wins, fighting hard will be about all that’s left to Obama as the filibuster proof majority in the Senate will have gone up in smoke. And that, of course puts his entire ambitious agenda, to include the pending health care bill, in jeopardy.

A potential casualty: the health care bill that was to be the crowning achievement of the president’s first year in office.

The health care backdrop has given the White House a strong incentive to strike a defiant posture, at least rhetorically, in response to what would be an undeniable embarrassment for the president and his party.

Anyone who continues to pretend this isn’t an election with far reaching implications and a referendum on the agenda pushed by the President and Congressional Democrats needs to again review the place in which this Republican is leading. Those who would like to put it all on an unattractive candidate need to remember that candidate blew away her closest rival in a Democratic primary by 19 points. This isn’t just about Martha Coakley.

An upset by Republican Scott Brown would be covered in many quarters as a repudiation of Obama, especially after Obama’s last-ditch campaign appearance with Coakley 36 hours before the polls opened.

This is about an electorate that is increasingly uneasy about the path the federal government under the Democrats is taking. This is a reaction to the action of the last 364 days. And the timing couldn’t be any better:

A Massachusetts embarrassment would strongly increase the pressure Obama was already facing to retreat or slow down the “big bang” agenda he laid out a year ago.

That includes cap-and-trade, which Congressional Democrats are backing away from as quickly as they can, and immigration. What this should force, if Democrats can swallow the lesson and heed the consequences of a Brown win, is a shelving of those issues and a concentration on the economy like a “laser beam”.

The possibility that Democrats could avoid a blood bath in November is iffy at the moment but salvageable if they do that. If, however, they get combative and attempt to ram through the present agenda (as it appears they will) while continuing to giving lip service to the economy and job creation (shall we have another “job summit”?), then they’ll suffer the consequences in mid-terms 10 months from now.

Today’s election is a game changer. Even if Brown loses, the message should be clear – back off the spending and expansion of government, concentrate on the economy and do what is necessary to get this country moving again economically, or the voters will put people in who will, even in deep blue Massachusetts.

The polls opened 12 minutes ago – this should be a very interesting day.

~McQ

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All your retirement money are belong to us

How’s that 401(k) working out for you?  Well, if the Obama administration has its way, you won’t have to worry about that any more.

Apparently, you’re too stupid and lazy to be trusted with your own retirement planning. So, what you need is for the government to “urge” you to convert your 402(k) plan to a government annuity.

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.

TaxProf has a roundup of some useful links concerning this, but here’s the key takeaway:

There literally isn’t enough money in the world to float the T-notes the Treasury must issue in order to prop up our unsustainable spending path.  There are, however, about $3.6 trillion in funds just sitting in 401(k) accounts.  If the government can urge–or force–you to convert your 401(k) into T-note funded annuities, the Treasury can continue to issue those notes to float the government’s deficit.  Essentially, you’ll be converting your retirement funds into an IOU from the government…just like your social security account has already done.

This will allow the Treasury to keep borrowing money–from your retirement–in order to keep issuing more debt that they may or may not be able to pay back to you

funds intu The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.

Obama’s Failure Can Be Blamed On Congressional Democrats – “It’s The Economy, Stupid”

There is a lot of analysis going on about Obama’s first year and why, it seems, his job approval numbers are so dismal. And why, given the promise he brought to the White House, at least according to the PR faithfully pushed by his campaign, are Democrats looking at the possibility of large net losses in both houses of Congress?

The first hints of the dissatisfaction of the electorate came in the Virginia and New Jersey gubernatorial races where Republicans won – in VA handily. The Democrats claimed their candidate there ran a lack luster campaign and it wasn’t at all a referendum on the Obama administration and the Democratic agenda. But now, the very same thing is happening in Massachusetts with an unknown GOP state legislator giving the Democratic candidate for the “Ted Kennedy” seat, a run for her money (and, in the latest poll, up by 4 points over the Democrat).

Is this too the result of just a lackluster campaign and a poor candidate? Certainly a case can be made for that – except in this case, it is reliably and overwhelmingly Democratic Massachusetts. It doesn’t work quite as well there as it might in VA. It is beginning to sound like a bit of whistling past the graveyard.

In fact, as with VA, it is a reflection of some deep-seated dissatisfaction with Democrats in Congress and yes, with Obama as well. Charlie Cook nails the problem today in his analysis of why the Democrats are in such deep electoral trouble:

Honorable and intelligent people can disagree over the substance and details of what President Obama and congressional Democrats are trying to do on health care reform and climate change. But nearly a year after Obama’s inauguration, judging by where the Democrats stand today, it’s clear that they have made a colossal miscalculation.

The latest unemployment and housing numbers underscore the folly of their decision to pay so much attention to health care and climate change instead of focusing on the economy “like a laser beam,” as President Clinton pledged to do during his 1992 campaign. Although no one can fairly accuse Obama and his party’s leaders of ignoring the economy, they certainly haven’t focused on it like a laser beam.

Cook is actually minimizing the problem somewhat. In fact, Obama and his party leaders have given little but lip service to the economy, unemployment and job creation while they’ve spent enormous time on agenda items which mean very little to a country suffering the depth of joblessness and economic hardship now prevalent. Add to that their extremely obnoxious handling of what they have focused on, the blatant partisanship in which they’ve conducted their “business” and the total lack of transparency in that process and you have a pretty toxic picture painted of Democrats in general.

Why, then, did Obama’s promise fail to materialize in his administration – at least in the first year? Well there are many reasons. Among them is a rookie politician (Obama) who got rolled by an experienced Democratic leadership that saw a small and closing window of opportunity to pass huge social welfare agenda items that had repeatedly failed in the past and chose to tackle them while ignoring the obvious elephant in the room. My guess is they miscalculated in more than just the way Cook contends. With their majorities, I’m sure they thought they could quickly put these bills together and pass them, leaving plenty of time to work on the economy. But, of course, given the diversity of opinion and interests even among Democrats, that wasn’t the case. It has dragged into the new year while work on the economy has been essentially non-existent (they threw a $787 billion pork bill out there and called it “stimulus”, figuring their usual panacea – throwing money at a problem – would work. Unsurprisingly, it hasn’t).

Voters are mad about that. Rightly or wrongly, they blame the government for what does or doesn’t happen on their watch economically. For the most part, government can best affect the economy by making it easier for markets to expand and create jobs – tax cuts, less regulation, etc. Spending rarely sets up the conditions to do that. But regardless, of what action the government takes, voters expect the economy to be the absolute focus of government in times of economic crisis.

That has not been the case at all with this administration or Congress. And, it appears, they’re going to pay a huge price for that in 2010 and possibly 2012. What was a bright Democratic future less than a year ago has now become a scouting trip for a good place in the “wilderness” for Dems. If, as many economists expect, unemployment remains at 9% through 2012, we may be reading the obligatory columns about the “Death of the Democratic Party”. And while Obama’s personal popularity may remain high (while his job approval numbers tank), that doesn’t mean such perceived economic negligence will be rewarded with a second term.

~McQ

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By George The Stimulus Worked! We Say So!

Don’t you just love non-falsifiable government claims?

Why here’s one now:

The Obama administration, in its latest progress report on the $787 billion stimulus program, said both the overall economy and employment continued to be in better shape at the end of 2009 than they would have been without the government’s help.

Better shape, hmmm? Wasn’t this the same stimulus which promised it would keep unemployment below 8% if passed? Yet here we are at 10% with no real relief in sight. Wasn’t this the stimulus which was promised to create or save millions of jobs? Even the administration has finally given up making such claims, instead quietly changing the way it makes such determinations and including pay raises and anything even remotely job related on which the money was spent. So when further claims, such as this, are made, they should be taken with a large and skeptical grain of salt:

Though unemployment reached 10 percent at year’s end—two percentage points higher than the peak that the council forecast when the administration proposed the stimulus package to Congress nearly a year ago—the number of jobs was between 1.5 million to 2 million greater in the fourth quarter than it would have been without the recovery plan, the council said.

This is the same council that made the 8% claim and changed the rules for counting “saved and created” jobs. If anything, their claims should be completely disregarded.

This is the stimulus which was claimed to be so necessary to the recovery, yet of the $787 billion signed into law, only $263 billion has been spent. How is that a stimulus? The theory is the government pumps money into the economy as quickly as possible to “stimulate” growth and hiring. Yet this particular bill is structured so that less than half the funds are spent within what most would consider the critical first year? That alone tells you two things about this particular bill:

  1. It had little to do with stimulus and a lot to do with pork. In fact, it appears to be a 100% pork bill despite the President’s claims to the contrary. Just because individual earmarks weren’t in the bill doesn’t mean this bill isn’t a compilation of wasteful spending and pet projects. They were simply written up differently than they normally are. There was never any intention of spending this money to jump start the economy as witnessed by the amount spent in the first year and its lack of effect. It can be credibly claimed, in contravention of the administration’s claim, that it hasn’t done anything to stimulate economic growth. Don’t get me wrong, I’m not in favor of the spending that has been done or its continuation, but any objective analysis would make the point that $263 billion in a contracting 14 trillion dollar economy is likely to have little effect if any at all. So far the numbers seem to verify that.
  2. Any claims made about the bill’s effect should be viewed very skeptically. In reality, this bill was a spending bill, not a stimulus bill. It was the bill which allowed Democratic legislators (and a good number of Republicans) to spend money on things they’d been unable to get through the body in the past. Again, its structure and the items upon which the money were spent make the argument pretty handily. Its failure to “stimulate” as advertised is precisely why there is talk of a second stimulus. There never was a first.

Whatever recovery has gone on in the economy has been largely a result of factors other than this bill. That includes the positive 3rd quarter GDP numbers they try to trot out as “proof” of the stimulus’s efficacy. Those numbers were driven by the cash for clunkers program, a program outside the stimulus bill, and were largely illusory. They were illusory because it was “growth” driven strictly by government spending, it was temporary growth because it was simply stealing from future sales, and when all the dust settled, that was quite apparent to those who analyzed the results.

What this present claim is all about is message preparation. These claims, which really don’t stand up to scrutiny at all, are being made now for a reason. The president has a State of the Union address coming up soon and needs some “good news” very badly. That’s why these non-falsifiable claims are being tossed out there now. Establishing these claims and repeating them often enough is done in the hope of having them become “conventional wisdom” by the time the SOTU address rolls around. Then when the President makes these claims, an uncritical press will parrot them, establishing them as “fact” for the administration and a part of the narrative that will be repeated in 2012.

That is how the game is played, folks.

~McQ

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Another Program FAIL?

It appears a number of economists and financial experts see it as a failure. Not only a failure but an impediment to recovery.

The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good.

The harm it has done is precisely the same harm that many of the larger programs have done, and something we warned about here at QandO at the time. Instead of letting the market take the hit it deserved for the bad  risk it undertook and giving it an opportunity to digest that and then begin recovering, both the Bush and Obama administration’s chose to try and manage the crash and avoid the pain. Consider this particular program a microcosm of what many experts believe we’ll see happen in the larger economy. And, as usual, while it was something done with best of intentions it has run afoul of the Law of Unintended consequences and as critics are saying, has seemingly done more harm than good.

Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Homes Affordable, has raised false hopes among people who simply cannot afford their homes.

As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

On the other side of the program are the lending institutions who some experts claim are using the program to delay an honest accounting of the toxic loans they have outstanding.

Only after banks are forced to acknowledge losses and the real estate market absorbs a now pent-up surge of foreclosed properties will housing prices drop to levels at which enough Americans can afford to buy, he argues.

Instead, we’ve chosen to string this all out:

Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

In other words, government intrusion – with the best of intentions – has impeded the market’s ability to properly reconcile the losses and begin recovering and learn from the experience. Instead, both homeowners and financial institutions have been given false hope that they can avoid this pain and somehow benefit from the program without having to do what is really necessary. And this false hope, upon which reality will eventually intrude, is simply delaying the financial reckoning and further delaying a real recovery. Once that is done:

“Then the carpenters can go back to work,” Mr. Katari said. “The roofers can go back to work, and we start building housing again. If this drips out over the next few years, that whole sector of the economy isn’t going to recover.”

The article goes on to discuss proposed fixes, tweaks and alternatives. But the bottom line is the existing program doesn’t help, but instead hurt the chances for recovery within the housing market. And that’s the lesson here. There is pain in life, but pain’s usefulness is its warning not to do what one did to incur it and to modify behavior in the future to avoid it. The problem with removing the pain quotient is the lessons necessary to modify future behavior and avoid repeating the painful activity are lost. Additionally, by attempting to avoid the pain, the present problem isn’t quickly fixed, but instead drags out as false hope does its damage before reality finally takes its course.

No one wants to see people lose their homes, but the fact remains many took on homes they couldn’t afford and many lending institutions backed their acquisition. This program isn’t going to make their homes more affordable to them nor is it going to make their loans good ones. Time for the players, not the taxpayers, to pay the piper. Government needs to back away. Until they do and the financial reckoning necessary takes place, the recovery in the housing market will continue to be delayed.

~McQ

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Inflation: The Lurking Beast

Despite all the happy talk from the Fed about its ability to manage the money supply and wring the excess out of the economy at the proper time, avoiding inflation, when and if the economy ever takes off, is going to be a lot tougher than advertised. And we’re beginning to see rumblings that inflation is trying to find it’s footing:

Inflation at the wholesale level surged in November, reflecting price jumps in energy and other products.

The bigger-than-expected increase is certain to get the attention of Federal Reserve policymakers beginning a two-day meeting on interest rates.

The Fed has been able to keep interest rates at record-lows to bolster the shaky recovery, but if inflation pressures begin to mount, the central bank could be forced to start raising rates sooner than expected to cool the economy and keep prices in check.

That’s the trade-off: raise interest rates to hold off inflation. The tricky part is knowing how much to raise them to do that without killing the recovery. And, with the massive amounts of cash pumped into the system, I’m not sure that’s possible. Which means it is probable, at some point, that the Fed is simply going to have to make a choice – inflation or high recovery killing interest rates. My guess is they’ll choose the latter (while the politicians holler foul and try to spend more money). That’s why many don’t see economic recovery in the cards any time soon despite the “green shoots” so many politicians continue to spot among the economic ruin of the present economy.

~McQ

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Berkeley Gets It Wrong – Again

Whatever your feelings on abortion, this isn’t representative of what is being considered:

The city of Berkeley made an official statement on abortion Wednesday by sending coat hangers — a symbol of illegal abortions — to 20 Democrats in the U.S. House of Representatives who voted to restrict federal funding for abortions in the health care bill.

Councilmember Kriss Worthington, who co-sponsored the item before the City Council on Tuesday night with Susan Wengraf and Linda Maio, put the coat hangers and an official city letter in the mail Wednesday.

“The coat hanger represents the time when women had to have abortions in back alleys and tried to self-abort,” Wengraf said. “My initial take was this is too extreme. But women’s reproductive health is very important to me.

“I don’t want my granddaughter to go through what my grandmothers had to. I don’t want it compromised. I don’t think the health care bill is reform if it excludes access to women’s reproductive health care.”

It does not “exclude” access to “women’s reproductive health care”, today’s euphemism for abortion. Abortion remains legal and accessible. It simply denies payment at a federal level for the procedure, much like coverage for cosmetic coverage is denied. Does the denial of the latter somehow “exclude” access to cosmetic surgeons and make that procedure a “back alley” procedure? No, you simply buy a private bit of insurance or, *gasp*, pay for the procedure out of pocket. But both remain completely legal and completely available. Neither, however, should be subsidized by taxpayers (along with many other things).

“I think the coat hanger is an inappropriate symbol, and it could backfire on us,” Wozniak said.

Indeed, it’s not only inappropriate, but it demonstrates a fundamental misunderstanding of the proposal which makes the coat-hanger group look foolish. But then consider what group is doing this (the city that banned the military) and it isn’t at all surprising they look foolish.

~McQ

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Harsh Words For Politicized Economic Advisers

Richard Epstein, writing in Forbes, has some very unkind but deserved words  for President Obama’s panel of economic advisers and specifically, Christina Romer.

The recent “upbeat” news is that the level of unemployment has leveled off at about 10% after its earlier climb this year. And just what has been the role of his professional advisors in the sorry performance of the last 10 months? To tell, it appears, the president exactly what he and his political advisors want to hear.

He points to Romer’s recent WSJ editorial:

Exhibit A is Christina Romer’s recent Wall Street Journal column, “Putting Americans Back to Work.” Romer heads the president’s Council of Economic Advisers. Her column rates as a bit of transparent propaganda that belongs in a fan magazine, not a serious newspaper. If she wrote it of her own volition, she should be fired for economic incompetence. If, as seems more likely, the White House wrote it for her, or told her just what to say, she should resign in protest.

If, over the past 10 months, you’ve had the growing feeling (or realization) that we’re now into politics 2.0 and the entire administrative organization is committed to propagandizing and politicizing everything, I’d say you’re right. Oh certainly past administrations have been guilty of some measure of that, but not to the level we’re seeing it now – to the point that it is so obvious that it must be commented upon by usually dispassionate economic analysts.

For instance, Epstein says:

Her column contains nine awestruck references to presidential omniscience and benevolence. Its opening sally places all the blame on the Bush administration, by claiming that Obama took office at “the height of the worst downturn since the great depression.” Funny that she failed to mention the tumultuous events of September and October 2008 had cooled off before then. Nor, of course, did Obama “stop the economic free fall” in those tempestuous autumn days, unless Moses also parted the Red Sea.

Worse still, she blindly celebrates Obama’s worst economic blunders as his greatest triumphs. The $787 billion stimulus package in the American Recovery and Reinvestment Act was a bust. Its protectionist “Buy American” provisions remain a perpetual irritant to international trade. The warped Cash for Clunkers program created a short bubble via a massive public giveaway, while doing nothing to help the environment.

Why, one might ask, with all these supposedly farsighted maneuvers on the books, does the president still face a “weak” employment market? Romer offers no explanation for how Obama’s wise decisions made matters worse. Instead she hyped Obama’s inconclusive meeting with various community leaders that took place the next day.

Or, as he says, propaganda and cheerleading. Is this what we expect from so-called economic experts advising the president? Is there any wonder that unemployment stands at 10% after these same advisers told the president that the “stimulus” would hold it at 8%?

Why aren’t they, instead, advising the president to do those things that government can do that actually would spur employment? Is it because they are as political as the rest of the administration? If not, why would competent economists address unemployment like this:

High on its agenda was an investigation of public-private partnerships that could, at best, only usher in yet another round of economic gimmicks. No credible economist could think that “direct incentives of homeowners to retrofit their homes to improve energy efficiency” could place a dent in the ranks of the 15.4 million unemployed. Far more likely is a replay of the older story: subsidies for these programs sop up wealth and thus kill sensible job opportunities elsewhere.

Or, playing to the political agenda even when it is ineffective in doing what really needs to be done – square peg/round hole.

What they ought to be saying the president is either being left unsaid or being ignored. The reason will be obvious:

You can only improve labor markets by freeing them up. Scrap the talk about goofy ad hoc subsidies, and tell the president, for the first time in his life, to think hard about deregulation. Roll back the three recent minimum-wage increases that have blunted job creation for low-skilled workers in a stagnant labor market. Announce he will veto any effort by Congress to pass the Employer Free Choice Act, whose uncertain threat of compulsory unionization has prompted many businesses to shelve any plans for expansion. Abandon the monstrous health care bills winding through Congress, whose panoply of taxes, subsidies and regulations are job killers of the first magnitude. Put a halt on legislation for carbon caps and taxes until the science gets sorted out. Don’t let the EPA make a hasty endangerment finding on carbon dioxide.

Deregulation costs nothing to administer, increases jobs and adds to the tax base. It is only an added benefit that sound economics reduces presidential power.

Those are all things government can do now, and, they’re all things which would spur economic activity and employment. And they are all things that, politically, go completely against the agenda of the Democrats and the President. And, apparently, they go unspoken by his so-called Council of Economic Advisers.

The people are poorly served when politics seeps into every layer of an administration. Political survival becomes the foremost priority. Those whose job it is to credibly and ethically serve a president and thereby the people, fail in their duty when they become mere propaganda tools of an agenda. When the “advise”, for instance, of an economic panel is driven by politics and a desire to support an agenda rather than by a real desire to serve the best interests of the country, they fail in the inherent duty their position demands and even worse, they fail public’s trust. Being a credible adviser doesn’t mean always saying yes to the agenda, something this present bunch could apparently afford to learn and learn quickly.

~McQ

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