Economy & Budget

Wiping blood off white buck shoes

In New York, the oldest and snobbiest financial and advising ventures are called “white shoe” firms.

This, they say, arose from the days when their hoity-toity employees wore white bucks to work.

These days, white shoe firms bear names notorious outside New York, like Goldman Sachs and Morgan Stanley. That’s because their arrogance, risky investments and confounding dealing in derivatives caused last fall’s Wall Street meltdown, slaughtered white shoe firms like Lehman Brothers, froze credit nationwide, and threw the rest of us into the Great Recession.

Now unemployment is up to 9.8 percent, a 26-year high. Banks repossessed 88,000 homes in September and filed foreclosure notices on another 344,000, according to RealtyTrac. Suicide hotlines report increases in calls, and a study released in July by researchers at several universities including the University of California documented the connection between unemployment, suicide and murder. Each percent increase in unemployment raised suicide rates by .8 percent and homicide rates by .8 percent, the research team found.

There’s blood on those white bucks. But the guys wearing them don’t seem to notice.


Extending unemployment benefits cannot wait (Sen. Jeanne Shaheen)

For nearly two weeks, I have been working with Senator Jack Reed (D-RI) and many of my fellow Senators to pass the Unemployment Compensation Extension Act to help struggling families across the country. With almost 2 million Americans in danger of losing their benefits by the end of this year, this bill extends unemployment benefits by up to 14 weeks in all 50 states and by an additional six weeks in states with the highest unemployment rates.

This issue should be simple. However, some Senators on the other side of the aisle appear to think that scoring political points is more important than helping working families who are about to have their safety net pulled out from under them.

They’re playing politics while 7,000 workers a day run out of benefits.  These benefits put food on the table, pay the mortgage, and help keep our economy going. This extension will help millions of Americans, and it will stimulate our economy by getting money into the hands of people who will spend it immediately.

Every day I hear from people in New Hampshire and across the country who want to know why the Senate isn’t acting quickly to extend unemployment benefits. They are facing the worst job market since the Great Depression; they are hardworking people who need to take care of their families and pay their bills; they are jobless workers who want to go back to work but cannot find a job. This is about people, not politics. We must act now to do the right thing.


Buying American through a healthy economy, not stimulus bill (Rep. David Dreier)

When it comes to legislative PR, it doesn’t get much better than “Buy American.” What could possibly be more patriotic than buying American-made products? During tough economic times, mandating that government contractors use only goods with the Made in the USA label doesn’t just sound like good policy, it seems like plain old common sense. We all want to create American jobs and promote American manufacturing.

So when a dramatic expansion of Buy American regulations was included in the “stimulus” bill, it may have sounded like a great idea on its face. The challenges with this policy only become apparent when we look beyond what sounds good and examine how these provisions actually work in the real world.

While federal agencies are accustomed to and equipped to deal with the substantial bureaucratic red tape that comes along with complying with the Buy American Act, few states and no local governments have any experience with the administrative and legal implications of these complicated regulations. The resulting confusion and uncertainty have caused a number of state, county and municipal projects to grind to a halt. In many cases, project managers have had no choice but to shut down badly needed construction and infrastructure projects while the lawyers work out the mess. Even those projects that have resumed work have faced escalating costs.


The Big Question: Did the pay czar go too far or not far enough?

Some of the nation's top political commentators, legislators and intellectuals offer some insight into the biggest question burning up the blogosphere today.

Today's question:

Did the pay czar go too far or not far enough?

John F. McManus, president of the John Birch Society, said:

Whether the Pay Czar went too far or not far enough is not the issue. The very existence of a Pay Czar - and all the other Czars - should be the issue. Anyone who can't see that this is government control of business is blind. America is being converted into a carbon copy of thousands of despotisms that have come before. Yes, corporations are guilty of betraying their trust to the public. But the answer isn't to centralize power in government. If the corporations have done something wrong, they should be brought to court. That's the way the country should be run - not by Czars!

Rep. Ed Pastor (D-Ariz.) said:

I agree with what he's going to do. I think that since we own most of these companies, maybe they should be under government salary and scale. And as a czar, he can determine what is the appropriate salary. I have no problem with it.

Rep. Mike Simpson (R-Idaho) said:

I think it's nuts for the government to have a pay czar. I don't think the government should be in the business of trying to regulate the pay of the private sector.

Rep. Vern Buchanan (R-Fl.) said:

I'm not big on czars in general, especially a pay czar. It's something I'd have to take a closer look at. It's not something I've focused on recently; I've been working on a resolution for more transparency in the healthcare bill. We had a couple czars in the past and now there's 30-something -- that's the bigger issue. They need to go through some kind of confirmation process so we know who they are, what they are and what their attitudes are about certain issues. I think that's the bigger issue."

Rep. Kurt Schrader (D-Ore.) said:

It's one thing to give an order, it's another thing to actually make it happen. So I'd be curious as to how this takes its course.

Rep. Virginia Foxx (R-N.C.) said:

I think the main focus of the government of the United States is national security. It is unfortunate that this president spends so much of his time on things that are not as important instead of spending his time on national security. Keeping us safe is the most important thing.

Michelle D. Bernard, president & CEO of the Independent Women’s Forum, said:

We still don't know exactly how the Administration will limit the salaries of executives at some of the firms that were top recipients of federal bailout dollars, but initial reports suggest that they'll be aggressive in slashing compensation for top executives—by an average rate of about 90 percent.

In many ways this seems a lose-lose policy-wise. The Administration's decision seems, in part, fueled by a basic belief that there is some “right” level of compensation and that it's government's business to prevent inappropriately large payouts for top executives. That's really not the proper use of government power. However, as is often the case, this government over-reach is the result of another government over-reach. And yes, the government does have an interest in protecting taxpayers' interests in the decisions being made by companies that received bailouts, including compensation packages. Let's just hope that the new government mandates are a one-time occurrence and that this encourages more companies to focus on keeping their finances sound so they'll never have to turn to the government for a handout again.

Dean Baker, co-director of the Center for Economic Policy Research, said:

It’s great to see Kenneth Feinberg (a.k.a. the Halloween pay slasher) do his job. The idea that executives at these bankrupt companies would be walking away with salaries in the tens of millions of dollars, funded with taxpayer dollars, should be offensive to every person who works for a living.

Of course it remains to be seen whether these announced cuts will mean anything. Wall Street is all about gaming the financial system and these people have risen to the top due to their skills at gaming. If the cuts are not iron-clad then we are likely to hear things like reductions in bonuses being offset by larger stock option grants or some other form of compensation being awarded at a future point. These are not honest people that are we are dealing with here.

It is also nice to see that Feinberg has rejected an argument that was earlier embraced by the administration concerning the "sanctity of contract" protecting bonuses and other compensation. This was always a ridiculous argument because contracts do not survive bankruptcy (ask the auto workers who lost the health care benefits that they worked for 30 years). These are firms that would be bankrupt except the government has deemed them too big to fail.

Giving executives who wrecked their firms special protection for their contracts, because their firms are very important to the U.S. economy, is ridiculous. The pay of these executives should be treated as though the firms are bankrupt, because that is effectively the situation.

Unfortunately, this round of pay cuts is just touching the tip of the iceberg. It does not address the larger problem of outsized Wall Street compensation and its culture of entitlement. The NYT quoted "a person close to the AIG board" as saying that the $200,000 pay cap was "insulting." This is an incredible statement since the individuals involved wrecked their company and cost the taxpayers tens of billions of dollars and are STILL getting a paycheck that is larger than 99 percent of the population We need to apply a wrecking ball to this Wall Street culture.

One potential tool is a modest tax on financial transactions taxes like the 0.25 percent stock transfer tax in the United Kingdom. If we put comparable taxes on trades of futures, options, and credit default swaps we could easily raise $100 billion a year and bring the financial sector down to size.

The other thing that we should do is to re-empower stockholders. The pay packages of the top 5 paid executives should go out for shareholder approval at regular intervals (not "say on pay", these should be binding votes). The process should also be designed to be more like a real election so that unreturned proxies are not counted. The only proxies that should count are those where shareholders explicitly expressed an opinion.

Robert Weissman, president of Public Citizen, said:

For the first time, the government appears to be set to take some meaningful action against business fat cats who a) run companies that exist only because of billions of dollars of taxpayer supports and b) still see fit to pay themselves obscene salaries.

The New York Times and other outlets report that Obama administration pay czar Ken Feinberg will require executives and top employees at the most bailed-out firms to cut back on salary by 50 percent. If these reports are true, Mr. Feinberg and the Obama administration deserve applause — with one big caveat.

Until now, there has been no systemic mechanism of accountability imposed on top-paid executives and employees at the bailed-out firms. They destroyed their own businesses, not to mention the national economy, but felt entitled nonetheless to hyper-compensation. And the government has done little to discipline them. Now, it appears Feinberg is prepared to do that for a narrow category of bailout recipients.

Notably, Feinberg reportedly will cap salary and bonuses at AIG Financial Products, the division that brought down a giant multinational and led the government to shovel tens of billions of dollars into AIG, at $200,000. This is an extraordinarily high salary for most people in America, but by the standards of Wall Street it is modest to the point of humbling.

Feinberg has authority only to limit pay at seven bailed-out companies. However, Wall Street itself would likely be out of business but for the trillions of dollars of federal supports it has received, including an array of ongoing supports from the Federal Reserve.

Wall Street firms outside of the Feinberg Seven apparently have no compunction about returning to the outrageous pay practices that helped create the financial crisis. Wall Street is on track to pay an obscene $140 billion in bonuses and compensation, according to Wall Street Journal calculations.

If Congress and the administration are serious about addressing the systemic issues with pay and Wall Street, the way forward is clear.

First, Congress should act immediately to impose a windfall bonus and profits tax on Wall Street. Some substantial portion of the funds that Wall Street aims to pocket as bonus payments and profit-taking should be returned to the public treasury.

Second, Congress should mandate that bonus payments be based on long-term performance over the course of a business cycle.

Big bonuses contributed to the crash by incentivizing dangerous short-term betting. Traders won in the short term. Firms, homeowners and the national economy lost in the long term. Fixing compensation incentives could help prevent that dynamic from recurring.

Andy Roth, vice president of Government Affairs at the Club for Growth, said:

There shouldn’t even be a pay czar. It’s quite amazing to even think that in a free-market economy like the United States, we have big government bureaucrats regulating the salaries of company executives. Thomas Jefferson once said, “The natural progress of things is for liberty to yield and government to gain ground.” This is evidence of that. We need to immediately terminate the pay czar position and completely remove the government from corporate boardrooms.

Glenn Reynolds, of Instapundit, said:

I'm not a fan of having all these czars — how'd that work out for the Russians? — and the notion of a "pay czar" seems particularly overbearing, and I suspect it's mostly meant as a demonstration of power. I also think that it will probably just chase away talent that we need to fix the problems. On the other hand, the worst thing about the Obama economic policy so far has been the blurring of lines between business and government, and the willingness of leaders on both sides of the divide to blur things further, for political gain and with taxpayer money. You can bet that these pay cuts will make future businesses much, much less willing to take government bailouts, and much, much more wary of government involvement in their affairs. That's a good thing, overall.


The Big Question: What should Congress do about Wall Street pay, bonuses? Anything?

Some of the nation's top political commentators, legislators and intellectuals offer some insight into the biggest question burning up the blogosphere today.

Today's question:

What can Congress do about pay and bonuses on Wall Street? Should lawmakers do anything at all?

Daniel J. Mitchell, senior fellow at The Cato Institute, said:

The American people have every right to be upset about generous compensation packages for executives at financial firms that are being kept alive by subsidies and bailouts.

But their ire should be directed at the bailouts, because that is the policy that redistributes money from the average taxpayer and puts it in the pockets of incompetent executives. Unfortunately, rather than deal with the underlying problems of bailouts and intervention, some politicians want to impose controls on salaries. This might be a tolerable second-best (or probably fifth-best) outcome if the compensation limits only applied to companies mooching off the taxpayers, but some politicians want to use the financial crisis as an excuse to regulate compensation at firms that do not have their snouts in the public trough.

This would be a big mistake. So long as rich people make money using non-coercive means, politicians should butt out. It should not matter whether we are talking about Tiger Woods, Brad Pitt, or a corporate CEO. The market should determine compensation, not political deal making. Markets don't produce perfect outcomes, to be sure, but political intervention invariably produces terrible outcomes.

John F. McManus, president of The John Birch Society, said:

The very existence of a "pay czar" to oversee the amount of compensation given employees by any company is completely abhorrent. But each of the companies whose pay practices are being judged accepted federal aid during the current crisis. The federal aid should never have been provided. Failing companies should be allowed to fail. What we have here is a bad development (the federal pay czar) treating an earlier bad practice (the doling out of federal aid). In a 1942 Supreme Court Justice Robert Jackson stated in one of his decisions: "It is hardly lack of due process for the government to regulate that which it subsidizes." Who can disagree?

Anna Burger, secretary-treasurer of Service Employees International Union, said:

It’s outrageous that after crashing our economy and taking trillions in taxpayer bailouts and backstops, big banks and Wall Street are raking in billions in profits and getting ready to pay out bonuses higher than during the boom years.

According to a recent poll, nearly 75 percent of Americans believe that the greed and risky decisions of banks and financial companies led to our financial crisis. And nearly 80 percent believe that Congress needs act to crack down on excessive compensation and bonuses at big banks and Wall Street.

That’s why more than 5,000 taxpayers from 20 states are headed to Chicago to protest the American Bankers Association conference next week and demand an end to Wall Street’s appetite for greed. And that’s why Americans across the country will be calling on Congress to act immediately to rein in big banks and Wall Street and create an economy that works for everyone again.

Congress must take steps to ensure banks stop foreclosures in order to save Americans' homes and state and local budgets; provide the same affordable loans to state and local governments that the banks receive from the federal government; restore small business lending to save jobs and tax revenue; lower interest rates on consumer credit cards, and stop charging abusive overdraft fees that take billions out of consumers' pockets. And Congress must pass the Employee Free Choice Act to ensure that workers can negotiate for higher wages and benefits, hold corporate executives accountable, and win their piece of the American Dream.

Dean Baker, co-director of the Center for Economic Policy Research, said:

Last fall, when the banks were on the edge of collapse, Congress could and should have put harsh conditions for bonuses on taking the TARP money. Goldman Sachs, Citigroup, and the rest were on the edge of going out of business. We could have put any conditions we wanted on the money -- we could have told the bankers to walk like ducks, to wear stupid hats, or to limit total compensation to $2 million.

Instead, Congress just handed them hundreds of billions no questions asked. It is also important to note that this would not have been interferring with the market. The market decision waas that these banks were out of business, therefore the CEOs and other big earners would get nothing. Taxpayers would be generous to have let them get $2 million.

Going forward, we should be clear that the basket cases, like AIG and Citigroup cannot give our big paychecks. There is no need to worry about losing good people, if they had good people, they wouldn't be bankrupt. Furthermore, there is no reason to believe that the people running these institutions can identify good people. If they could, then the companies would not be bankrupt.

We have to rein in the size of the financial industry. The best way that this can be done is with a series of modest financial transaction taxes, like the one that the United Kingdom has on stock trades. This would go a long way towards downsizing the industry and reducing the money floating around to pay huge bonuses. We also have to tell investment banks like Goldman Sachs that they can't gamble with the taxpayers dollars. This would also stop the huge bonuses.

Tom McClusky, senior vice president for FRC Action, said:

Can they? This Congress has shown little regard for the U.S. Constitution on what they can or can not do. Regardless Congress should clean up its own fiscal mess before they dive into issues that are none of their business.

Michelle D. Bernard, president & CEO of the Independent Women's Forum, said:

Congress should do absolutely nothing about pay and bonuses on Wall Street – it is none of their business how a private company chooses to pay its employees. Much of the public, after hearing about million dollar payouts and bonus packages, may think such compensation is inappropriate and undeserved. But that doesn't mean Congress should make such pay illegal. The free market is best suited to reward and punish companies for their policies, including how they pay staff. If a company over pays executives who deliver poor services, it is going to lose out to companies that pays their staff less since they be able to pass those savings on to customers.

As much as possible, the private dealings of corporations should remain private. Yet once the federal government starts handing out taxpayer money to these enterprises, taxpayers have an interest in company policy. That's one reason one should have been wary of the whole concept of corporate bailouts (and should be again in the future). It may be appropriate for Congress to set parameters for the activities (including compensation packages) of companies that still owe taxpayers money until the public is made whole. This would encourage companies to pay back the government as quickly as possible (and the government should welcome the payment of that debt). And once that debt is paid, Congress should step back from interfering in matters that are best left to employers and employees.

Glenn Reynolds, from Instapundit, said:

Given that the stimulus appears to have failed miserably at creating jobs, and given that the TARP Inspector General says that the bailouts have made things worse in the moral-hazard department, the best thing for the government to do would be to get out of the business of looking over Wall Street's shoulder, with one exception: Businesses that are "too big to fail" are too big to exist, and should be broken up under antitrust law. The miserable state of the nation's finances indicates that Congress and the Administration aren't anything special as money managers themselves, and there's no reason to think that they are any better at running Wall Street than they are at handling our money.

If Wall Street isn't spending our money, bonuses and salaries don't matter. And Wall Street shouldn't be spending our money.

Rob Weissman, president of Public Citizen:

Wall Street is mocking us. The giant Wall Street firms likely would be out of business had taxpayers not provided trillions of dollars in bailout money and supports. Now, within a year of these unfathomable bailouts, Wall Street has the gall to siphon off record sums in salary and bonuses. As troubling as the scale and audacity of these payments may be, what is most appalling is that they are, in large measure, the result of Wall Street resuming exactly the same speculative gambling and consumer rip-off strategies that crashed the financial system in the first place.

Wall Street is on track to pay an obscene $140 billion in bonuses and compensation, according to Wall Street Journal calculations.

Congress and the administration demanded no reciprocity for saving the financial system from the financiers. Now is the time to start.

Congress should act immediately to impose a windfall bonus and profits tax on Wall Street. Some substantial portion of the funds that Wall Street aims to pocket as bonus payments and profit taking should be returned to the public treasury.

Hyper-pay for executives and top traders is not just a symbolic issue. Crazy bonuses linked to this year's performance helped incentivize dangerous, short-term betting -- making it rationale to bet on housing bubble to continue to inflate, even in the face of certainty that it would eventually pop with devastating effects for financial firms (not to mention homeowners, communities and the national and global economy). Separate from addressing the scale of bonus compensation, it is imperative that Congress mandate that bonus payments be based on long-term performance over the course of a business cycle -- ideally 10 years, but not less than seven.


Republicans must stop playing politics with unemployment benefits (Sen. Kirsten Gillibrand)

More than 7,000 people across the country are losing their unemployment benefits every single day because Republicans are playing politics. Hardworking, middle class families, who are already cutting coupons and squeezing pennies to make ends meet, are now going to have the last strand of the safety net pulled right out from under them, simply because Republicans are obstructing progress.

Last week, the majority of my colleagues and I moved twice to extend unemployment benefits for millions of hardworking Americans who have been laid off and unable to find work in this difficult economy. These are our families, our friends, our neighbors. We all know someone who has been thrown into this situation.

But rather than do what is right, Republicans did what was politically convenient, twice blocking the extension in an effort to derail other economic recovery programs.


The Big Question: Does Obama deserve much criticism for his Katrina recovery efforts?

Some of the nation's top political commentators, legislators and intellectuals offer insight on the biggest question burning up the blogosphere and cable news airwaves on Friday, Oct. 16, 2009.

The Big Question today is:

Does President Obama deserve all the criticism he is getting for his Katrina recovery efforts?

Rep. Gregg Harper (R-Miss.) said:

My hope is that the President will work closely with Louisiana's Congressman Cao as New Orleans continues to rebuild this historic city. We should also not forget the vast devastation that Mississippi experienced as families' memories and livelihoods were washed completely away by Katrina.

Rep. Steve Scalise (R-La.) said:

President Obama missed an opportunity to prove his commitment to New Orleans' recovery and gain a full understanding of the challenges we are facing. There is a big difference between campaigning here as a political candidate and spending quality time here as the President. Yesterday's visit was more like a partisan campaign rally than a hurricane recovery visit. After the recent decision to move forward with an inferior level of interior drainage repairs, this Administration has shown that they don't fully grasp the changes that need to be made in the rebuilding of our region. The people of New Orleans deserve more than a 'drive-through daiquiri' summit with the President.

If the President is sincere in his commitment to our recovery, he will join our delegation in supporting Category 5 hurricane protection, including the strengthening of our levees, improving our interior drainage system, and restoring our eroding coastline. I invited the President to visit areas like the 17th Street Canal where the federal levees breached, and St. Tammany Parish where they still don't have adequate protection from storm surge.

There is no substitute for spending quality time on the ground to see first-hand the challenges we are still facing, and it was disappointing that the President passed up that opportunity to gain that deeper understanding.

Rep. Bill Cassidy (R-La.) said:

The more time the president spends on the ground, the better he'll understand the challenges of rebuilding, but we appreciate that he made this trip. What matters most is that he delivers on his many campaign promises to put effective policies in place for rebuilding South Louisiana.

John F. McManus, president of the The John Birch Society, said:

Too many Americans feel that it is the duty of federal government to take care of their needs, and to fix what gets broken by floods, storms, and other natural disasters. This is not the job of the federal government whether run by George W. Bush, Barack Obama, or George Washington. Years ago, floods destroyed homes along the Mississippi River and the federal government paid the people to rebuild, an absurd use of taxpayers' money just waiting for the next flood. The same goes for New Orleans. Building a portion of a city below sea level is ridiculous. Making taxpayers pay for the flood that developed is a small, but real, slice of tyranny. Don't blame Obama for this one; blame the perversion of the American system that allows such outrages in the first place.


We need an economic stimulus for rural communities (Rep. Phil Roe)

As unemployment continues to rise, and hopes of the trickle-down factor from the economic stimulus bill are dwindling, I am working to find solutions that will directly help East Tennessee and rural communities throughout the country.  Just like many industries across the nation, our businesses in small towns are being forced to downsize operations while demanding more from fewer employees.  Even in the current economic downturn, workers in smaller remote communities are at a disadvantage because economic development is virtually non-existent.  In fact, a growing number of rural workers are being forced to commute long distances or actually relocate their families in order to find work in metropolitan areas.  Ultimately, this only creates a worsening downward spiral.

That is why I introduced H.R. 3807, The Economic Stimulus for Rural Communities Act in an effort to spur the economy and create quality jobs in rural America.  Rural areas are often times hit harder during an economic downturn and they often lag in a recovery. This legislation would make rural employers eligible for a tax credit when they hire a rural worker.


HIRE America Act about creating jobs today (Rep. Tom Rooney)

Late last week I introduced the Helping Invigorate and Revive our Economy Act of 2009 (H.R. 3784), also known as the HIRE America Act, with my friend and colleague Rep. John Boccieri (D-Ohio).    The HIRE America Act will expand the Work Opportunity Tax Credit (WOTC) to help small businesses and firms hire more employees. 

This bill is simply about creating new jobs. With unemployment in Florida over 10 percent, and even as high as 15 percent in some areas, we have to find ways to create jobs and get Americans back to work.  The HIRE America Act is common sense legislation that gives employers additional incentives to create new jobs and hire more employees.  By increasing the Work Opportunity Tax Credit and expanding it to cover all new hires we are putting money back in the pockets of business owners, allowing them to expand and start getting people back to work. We can no longer stand by as the unemployment rate continues to increase.


The Big Question: Who benefits politically from the Dow topping 10K?

Some of the nation's top political commentators, legislators and intellectuals offer insight into the biggest question burning up the blogosphere today, Thursday, Oct. 15, 2009.

Today's question:

The Dow on Wednesday topped 10,000 for the first time in a year. Are there any political points to be scored by President Barack Obama's team? By anyone? 

Dean Baker, co-director of the Center for Economic Policy Research, said:

We have to get over the idea that the stock market tells anything about the economy or even necessarily anything about the state of business. Those of us who are old enough to have lived through the stock bubble know that the market often goes up (or down) for no reason. In principle, a rising stock market reflects the value of future corporate profits. Should people be happy when corporate profits are projected to rise because their wages are projected to fall?

A rising stock market is good for those who own lots of stock, a group that excludes the vast majority of the population. (Yes, I’m even including stock held in mutual funds in 401(k) plans. If you didn’t know this fact, then you should consider yourself too ignorant to take part in serious discussions of economic issues.) A rise in stock prices should be viewed in the same way that we view a rise in the price of corn. It’s good news for corn farmers, but not necessarily especially good news for the rest of us.

It is understandable that politicians would try to take credit for a rising stock market, just as they would take credit for the sun shining, if they could (and as long as people believe that a rise in the stock market somehow benefits them, even when they don’t hold stock).

It's the job of reporters to call them on this nonsense. Unfortunately, they rarely do.

John F. McManus, president of The John Birch Society, said:

The Dow Average is like the Consumer Price Index. When the CPI rises too dramatically, the items measured for it are changed to reflect a smaller increase. When some of the companies included in the Dow average go belly up or nearly so, they get dropped and others are inserted. The name of the game is manipulation of figures. We can be sure that some in the Obama administration will delight in the Dow again reaching 10,000, but foreclosures are up, unemployment remains very high, the dollar's value continues to sink, and the average American knows the nation is still in deep trouble. Anyone who points to the higher Dow Average as some sort of indication that the nation is pulling out of the recession - President Obama included - is either daft or dishonest.

Nick Nyhart, president of Public Campaign, said:

The 10,000 level is a quick-and-easy measure of success for those who want fast proof of an economic recovery. More important points to score are lowering the unemployment rate and Congress showing some backbone as it attempts to regulate the financial sector, resisting the full might of Wall Street’s big campaign contributors.

Rep. Russ Carnahan (D-Miss.) said:

It's just another benchmark on this road to recovery, which I think is going to be long, but it helps build confidence from investors. Our biggest job here is to grow jobs, so with that confidence and investments, it's going to help with job creation. So, yes.

Michelle D. Bernard, president & CEO of the Independent Women's Forum, said:

No one deserves credit for the Dow Jones passing above 10,000, and any politician who tries to claim credit does so at his or her peril, since the Dow could head back down at any time. It is a positive sign to see investors willing to put their money into American corporations: they believe that better times are ahead and that there is fundamental value in American businesses.

Yet politicians should be very concerned about the state of the economy both today and in the future: our staggering unemployment and under-employment rate, the ballooning debt that will afflict citizens today and decades into the future, and the declining dollar which could undermine our economic well being, from deterring foreign investment to eroding the value of private savings.

Policymakers need to focus on changing these more important measures by encouraging job creation, eliminating the debt and rewarding sound economic growth. The path to prosperity lies with encouraging work and entrepreneurship – unfortunately too many of the current policies are moving us in the wrong direction. And unless we correct these fundamentals the DOW will likely start moving in the wrong direction again soon...

Glenn Reynolds, from Instapundit, said:

It's nice that the Dow has reached 10,000 again, at least compared to the alternative. But it's not much of an accomplishment, really. In constant dollars, today's 10,000 is equivalent to 7,537 ten years ago -- when the Dow first hit 10,000. In gold, today's 10,000 is worth 10 ounces of gold, while 1999's was worth 30. So an unadjusted 10,000 isn't all that impressive.

The real question is where we'll go from here. Policies of massive debt and profligate government spending have never done much to promote real, sustained economic growth, and there's certainly no reason to think that they'll do so this time.