-
Obama: Higher Taxes Are Bad for Economic Growth
Tweet Share on Facebook June 12, 2008 Comment (7)I just got off the McCain conference call on gasoline prices and taxes. Rep. Eric Cantor and economic policy director Douglas Holtz-Eakin did the talking for Team McCain. In addition to pushing McCain's summer gasoline tax holiday, Holtz-Eakin made a point of referring to Barack Obama's recent interview with CNBC's John Harwood in which Obama gave this answer about what he would do about his tax increases if the economy was weak in 2009. This was Obama's answer:
Some of those you could possibly defer. But I think the basic principle of restoring fairness to our economy and encouraging bottom-up economic growth is important.
"Why would you want to damage the economy at all?" asked Holtz-Eakin. I found Obama's answer particularly strange given that I have appeared on CNBC with many left-of-center economists who are completely dismissive of the negative impact of higher tax rates at any level less than 90 percent or so. But here's Obama clearly making the connection that higher tax rates somehow retard economic growth. New economic policy director Jason Furman must already be working his wonkish magic!
-
A Rosy Scenario for the Economy
Tweet Share on Facebook June 12, 2008 Comment (1)Investment strategist Ed Yardeni outlines an upbeat scenario for the economy and the stock market:
So where do I see the S&P 500 by the end of the year? On Tuesday, Joe and I lowered our forward earnings forecast to $100 per share for the end of this year, down from $103. It is currently at $99.92. So barring a more severe economic downturn than we are expecting, we feel relatively comfortable with this flatline projection. The current forward P/E is 13.6. We think it is more likely to go up than down from here. Indeed, we expect a nice P/E-led rally in stocks later this year if:(1) the price of oil stabilizes south of $150, (2) core inflation remains around 2 percent, (3) headline inflation moderates,(4) home sales and prices stop falling,(5) the Fed holds its fire, (6) the dollar firms, and(7) the global economy continues to expand. We think a big rally could be triggered by a rash of foreign companies acquiring US companies.
-
Budget Busting Obamanomics
Tweet Share on Facebook June 12, 2008 Comment (2)Ouch! The centrist Capital Gains and Games blog dissects Obamanomics—with a vengeance. Here are the key excerpted points:
1) [Obama] would also impose a truly massive Social Security payroll tax increase on those with incomes over $250,000 by lifting the income cap. These tax increases would have some negative effects upon the economy, as would his protectionist trade proposals.
-
Kudlow: Rate Hike Could Be Coming Soon
Tweet Share on Facebook June 12, 2008 CommentFrom The Man himself:
Is there a July Fed action coming to take back a one-quarter rate cut? I think so. That would put up the target to 2.25 percent. It would be a shot heard round the world, strengthening the dollar and attracting new liquidity and capital flows into the US economy. Bullish for containing inflation, keeping down the unindexed capital gains tax, and helping stocks and the economy to recover. Plosser is right on the money.
-
McCain Veeps and Cap-and-Trade
Tweet Share on Facebook June 12, 2008 Comment (7)Nachama Soloveichik over at the Club for Growth kindly sends me a rundown of where the possible McCain veeps stand on cap-and-trade legislation. (But nothing on Carly Fiorina and Meg Whitman.) Here are some excerpts:
Charlie Crist: This year, Crist has pushed for and signed legislation [for] a plan to cap carbon emissions in his own state.... Governor Crist also signed an agreement with the British government to join forces in creating a global cap-and-trade market for greenhouse gas emissions.
-
The Jason Furman Saga: Has Obama Fired His New Economic Adviser Yet?
Tweet Share on Facebook June 11, 2008 Comment (13)So Barack Obama has named economist Jason Furman of the Brookings Institution as his top economic adviser. Very interesting pick. Already, liberal activists are in a tizzy because of his contrarian positions on some policy issues. Here is what I can tell you about Furman. (I have spoken with him on several occasions, and several conservative economists I know think highly of him.)
1) Furman is no protectionist. He understands the benefits that open trade brings America, such as low-priced goods at Wal-Mart and the intense competition that leads to innovation. The Hamilton Project, the program he ran at Brookings, is all about making sure the benefits of trade are more widely dispersed and the losers from trade taken care of—not scrapping NAFTA or the World Trade Organization. Here is what Furman told me back in 2007:
-
Should Ron Paul Voters, Libertarians Choose McCain?
Tweet Share on Facebook June 11, 2008 Comment (207)John McCain's campaign knows it can't afford to have many disgruntled Ron Paul supporters either sit home or instead vote for Libertarian candidate Bob Barr. Those voters could be the difference in tight western states such as Colorado, New Mexico, and Nevada. Right-wing radio-talk-show host Glenn Beck, for example, has said he just can't bring himself to pull the lever for McCain. Libertarians have a host of problems with McCain. Some are against the Iraq war. Others view his climate change policy as the biggest government power grab since the New Deal. With all that in mind, I asked investment strategist (and friend of this blog) Donald Luskin, a Ron Paul guy who is now advising Team McCain, why libertarians should vote for McCain. Here is what he E-mailed me:
It's a question of game theory, and whether you consider yourself a passive player or an active player in the game. As a passive player, that is, a mere voter, it probably doesn't matter what you do. Unless there is a perfect tie without you, your vote is irrelevant. If you are a passive player who wants to make a "statement," then you should cast your symbolic vote for Barr or Paul (unless the statement you want to make is that you think that Obama is so bad, you will vote for an imperfectly libertarian McCain, in which case McCain's very imperfections add power to your symbolic snub of Obama).
-
Obama's Oddly Revealing Economic Speech
Tweet Share on Facebook June 10, 2008 Comment (10)Listening to Barack Obama's economic speech yesterday, I was reminded of a scene from The Princess Bride where two of the characters have a battle of wits over which of two cups of wine also contains poison:
The Man in Black: You're trying to trick me into giving away something—it won't work.
Vizzini: It has worked—you've given everything away—I know where the poison is.
What should have been a fairly routine rehash was quite, though perhaps unintentionally, revealing. Here is what I learned:
-
Obama Vs. Carter Vs. Mondale
Tweet Share on Facebook June 10, 2008 Comment (14)"Senator Obama says that I'm running for Bush's third term. It seems to me, he's running for Jimmy Carter's second," was John McCain's reaction to Barack Obama's big economic speech yesterday. A mildly amusing line—and one I have decided to explore. I have dug up economic-themed excerpts from three speeches, in no particular order: Obama's speech, Carter's 1980 acceptance speech at the Democratic National Convention, and Walter Mondale's acceptance speech at the 1984 DNC. They are all amazingly similar. See if you can figure out which is which. I'll give the answer at the end of the blog post.
Now I have tweaked them a bit to alter any giveaway references. For example, every "Reagan" has been changed to "Bush" or "McCain." And I have chosen to exclude Carter's famous line, "Sorry, Governor Reagan. You are no Mr. Roarke, and America is no Fantasy Island!" (That's a joke, BTW.)
-
Why the Economy Is Better Than You Think
Tweet Share on Facebook June 9, 2008 Comment (50)The media love bad news. Bad news sells. A story with the headline "America's Best Airports" probably won't be as popular as a story called "America's Worst Airports." For another example, here's a story about the U.S. economy from the latest issue of Newsweek, "Why It's Worse Than You Think." Not a surprising piece, given that the magazine made its recession call back in February, though the economy has stubbornly refused to roll over. A few choice bits of negativity from writer Daniel Gross:
But at root, $4-per-gallon gasoline and $20-per-pound steaks are largely a function of the changing economic geography, and the diminished stature of the U.S....The realization that the U.S. no longer controls its economic destiny is contributing to the widespread feeling of unease and crisis of confidence. Economically speaking, the 1990s belonged to the U.S. and New York and Silicon Valley. But as this decade motors toward its close, it seems powered by China and Russia and Dubai and Mumbai. It's as though we're home watching reruns while everybody else is out partying.
