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Is Obama Really a Marxist? Puh-Lease
Tweet Share on Facebook June 6, 2008 Comment (55)"I have said publicly, and I will again, that unless he proves me wrong, [Barack Obama] is a Marxist," said Tom DeLay, the former congressman and House Republican majority leader, in a recent radio interview. (And he is not the first GOPer to suggest as much.)
Now in the dialogue of American politics, there are few classic—and loaded—charges. "Appeaser" is one. "Isolationist" is another. And "Marxist" would have to be right up there with those two. I think to call someone a Marxist, you have to provide some evidence that he 1) believes capitalism is based on exploitation and 2) is calling for a worker's revolution.
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Dude, Where's My Recession?: The Series
Tweet Share on Facebook June 6, 2008 Comment (6)The economy seems to be slowly accelerating, yet the unemployment rate is rising sharply—as evidenced by its biggest jump in 22 years. It rose from 5.0 percent in April to 5.5 percent in May. (BTW: The betting markets still put the odds of recession this year at just 1 in 3.) So what's the deal?
1) This period reminds me of 2003, when the unemployment rate jumped from a low of 5.8 percent to a high of 6.3 percent even as the economy grew 2.5 percent coming out of the recession. Unemployment is a lagging indicator, folks.
2) When we've had a good jobs report in recent years, economic bears would often knock it by pointing out that a rising number of people had left the workforce and thus were no long counted as unemployed. This is the labor force participation rate. Well, one reason the unemployment rate rose so much last month is that the LFP rose sharply to 66.2 percent from 66.0 percent, meaning people are coming back into the job market.
3) Payrolls dropped by 49,000 in May, yet this is still far below the losses of 200,000 to 300,000 typically seen in a recession, which this is not.
4) The econ team at Macroeconomic Advisers has looked at the May jobs report and now thinks the economy will grow at a 1.7 percent rate for the second quarter. The big jump in the unemployment rate didn't cause the team to change its forecast at all. The Un-Recession continues.
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Why Bernanke is No 'Obamacan'
Tweet Share on Facebook June 5, 2008 Comment (5)In a way, Barack Obama was for Reaganomics before he was against it. By that, I mean the putative Democratic presidential nominee broadly accepted the reality that the lower taxes, lighter regulation, and freer trade of the past 25 years have more or less been a pretty good thing for America. Not perfect, but good.
At least, that was the message he gave in his book The Audacity of Hope. But the Obama who has emerged during the presidential campaign has been quite different, basically advocating a reversal of Reaganomics, and Clintonomics, too. Obamanomics 1.0 saw the value of lowering tax rates from their stratospheric levels of the 1970s and of cutting regulation and opening up trade. Obamanomics 2.0 is all about raising taxes back near the levels of the Disco Era, regulating healthcare and energy, and rethinking NAFTA.
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Dude, Where's My Recession? The Series
Tweet Share on Facebook June 5, 2008 Comment (2)Employers continue to close their ears to the recession propagandists telling them that the economy is in a shambles. Initial jobless claims in the week that ended May 31 fell to 357,000 from 375,000, and the four-week average slid to 368,500 from 371,250. Such claims are usually way over 400,000 week after week during a full-blown contraction. The folks over at Action Economics point to a number of positive developments sure to hearten any bull:
The U.S. initial jobless claims drop to 357k in the final week of May, following yesterday's 40k May ADP gain [in private payrolls] and the upside May ISM NMI surprise at 51.7 despite a modest employment component correction, has put a positive spin on the employment indicators as we approach Friday's jobs report. Some upside surprises in today's retail chain store figures for May, and Wal-Mart's reference to its U.S. business as "strong," has also reinforced the notion that we will get a solid round of rebate-fueled retail sales figures for May despite the dismal vehicle figures, which probably were dominated by the disruptive effects of soaring gasoline prices and the American Axle strike.
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Madame Vice President, Hillary Clinton
Tweet Share on Facebook June 4, 2008 Comment (132)Hillary Clinton is still a slight favorite to be Barack Obama's running mate, at least according to the online betting markets. Intrade puts her at 22 percent and Sen. Jim Webb of Virginia at 19 percent. To be honest, I think Webb probably would give Obama everything that Hillary would say she brings to a ticket—appeal to white, working-class voters and foreign policy experience—with none of the drawbacks. (That would be hubby Bill.) And it seems doubtful that her middle-aged feminist base would flock to a John McCain-Mike Huckabee or McCain-Mitt Romney ticket or even stay home. But Obama might be well served by adding some of her policy ideas to his campaign agenda. Here are a few he might want to take a look at:
- Create government-sponsored innovation prizes to spur research into key underfunded technologies.
- Create universal savings accounts to which the government will match contributions by taxpayers with incomes of less than six figures.
- Pledge to not raise capital-gains taxes beyond the 20 percent rate of the Clinton administration.
And here are three he should avoid:
- Freezing mortgage rates
- Calling for a free-trade "timeout" or pause
- Determining just how profitable oil companies should be
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Dude, Where's My Recession?
Tweet Share on Facebook June 4, 2008 Comment (2)Yet more evidence today that we are not in a recession:
1) The Institute for Supply Management nonmanufacturing index for May came in at 51.7. That is consistent with an economy growing at about 2 percent a year or so.
2) The ADP private payroll report showed a gain of 40,000 jobs for May. This raises the odds that this week's employment report from the Labor Department might show an actual gain—not the decline of 200,000 to 400,000 typically seen during a recession.
What's more, Ben Bernanke's tough dollar talk is helping bring down oil prices, which would translate into lower gas prices if the decline continues. See, markets still work. Supply and demand still works. People and businesses are responding to higher prices by changing habits and practices—though Bernanke provided a nice kicker. And as today's strong productivity numbers show—it was up 3.3 percent year over year—the Amazing American Growth Machine remains a powerful beast. I mean, if you could swap economies with another nation, which would you choose?
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5 Ways Climate Change Is Hurting McCain
Tweet Share on Facebook June 3, 2008 Comment (2)If John McCain comes up short in November, particularly in coal states like Ohio and Pennsylvania, he may well wish he hadn't jumped aboard the cap-and-trade bandwagon. See, here's the thing: Inside-the-beltway critics keep harping that McCain doesn't have an overarching narrative that ties his economic policies together. (Obama's, beyond the idea of "change," seems to be all about economic security and income equality.) Rich Lowry over at National Review may have found one, as outlined in a post titled "Cost-of-Living Conservatives." Here goes:
Speaking of energy prices, this would be an excellent time for Republicans to emphasize reducing the cost of living and of raising a family across the board: on energy, drilling and opposition to more energy taxes; on health care, a reduction of insurance regulation to make it easier to buy low-cost plans; on taxes, the Ponnuru tax reform with its massive child credit for families; on prices, free trade to keep the prices at Wal-Mart and elsewhere as low as possible, an end to ethanol subsidies, and opposition to inflationary Fed rate cuts.
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Outsourcing the Recession
Tweet Share on Facebook June 3, 2008 CommentCount the econ team over at Wachovia in the "no recession" camp—or at least those folks think the possibility is unlikely and growing more so by the day:
Many are asking, "What happened to the recession?" Our short answer is the recession has been outsourced. While this answer almost always leads to a few chuckles, it comes closer to answering the question than many would suspect. Most of the weakness in the economy is in housing or housing related industries, including building products manufacturers and financial services. In contrast to past housing downturns, much more of the products that go into houses are imported.... As a result, much of today's weakness is falling on foreign firms.
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Shocker: Bernanke Comments on the Dollar
Tweet Share on Facebook June 3, 2008 Comment (1)It's the treasury secretary who talks about the dollar, not the Federal Reserve chairman. So it was notable that Ben Bernanke explicitly mentioned it four times in a speech today. A couple of takes on his comments, first from economist Michael Feroli of JPMorgan:
The real bombshell in today's talk came in Bernanke's discussion of the dollar's role in the Fed's policy response. "In collaboration with our colleagues at the Treasury, we continue to carefully monitor developments in foreign exchange markets." The Treasury-Fed Accord specifies a division of labor between those two institutions whereby the Treasury is responsible for the foreign exchange value of the dollar and the Fed is responsible for interest rates.... Bernanke went on the note that "We are attentive to the implications of changes in the value of the dollar for inflation and inflation expectations and will continue to formulate policy to guard against risks to both parts of our dual mandate, including the risk of erosion of longer-term inflation expectations." He concluded by noting that Fed policy will be one of the factors "ensuring that the dollar remains a strong and stable currency." The Fed last intervened in [foreign exchange] markets on September 22, 2000, when it and the Treasury jointly purchased 1.5 billion euros to support that currency.
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Bush's Revealing Economic Speech
Tweet Share on Facebook June 2, 2008 Comment (3)President Bush's economics speech today was a revealing bit of political theater. My quick reaction:
1) Bush urged the Democratic-controlled Congress to extend his 2001 and 2003 tax cuts. There's no chance that will happen this session. Now what is interesting is that Barack Obama has already pledged to keep most of the cuts. But despite that, I think John McCain and congressional Republicans will hammer Obama and congressional Democrats on this issue. Fair's fair. Democrats, after all, pound Republicans when they suggest reforming Social Security, even though they always exempt current recipients and folks nearing retirement age from any changes. Also, a weak economy in the fall could make the idea of higher taxes repellent to voters. Remember, the economy was in full recovery mode when Bill Clinton pushed higher taxes in 1992 and 1993.
