Economy & Budget

Protecting the Dollar

Brian Wesbury, a Chicago economist, has a great op-ed in The Wall Street Journal today, entitled “Déjà vu: The Fed’s Interest Rate Dilemma,” that is the best explanation I have seen about what is happening to the dollar and how to fix it.

Wesbury’s theory is that easy monetary policy has devalued the dollar and made bad situations in the energy and food sectors much worse. “Since 2001, and especially since September 2007 — when the Fed starting cutting rates in response to credit market issues — excessively easy monetary policy has driven oil and other commodity prices through the roof.”

Wesbury goes on to say: “The good news is we’ve been here before, and we know — well, at least 1980s Fed Chairman Paul Volcker knows — how to get out of this mess. Loose money in the 1960s and 1970s drove up the price of everything. A barrel of oil, which sold for $2.92 in 1965, rose to $40 in 1980. Most people believed that rising commodity prices indicated that the world was running out of resources … In 1980, then-Fed Chairman Volcker lifted the Fed funds rate significantly above GDP growth and held it there long enough to end inflation. This policy instigated a steep decline in oil prices, and drove a stake through the heart of stagflation.”
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Gassing About Gas

When Republicans were in the majority and Democrats were in the minority — not that long ago — just about every April, gas prices would rise uncomfortably, and the Democrats would charge the oil companies with collusion.

The Republicans would react by hauling oil company executives before the Congress, and then badger them about the high costs of filling up the tank.

Inevitably, Red Cavaney from the American Petroleum Institute would educate the members of Congress about the laws of supply and demand, about how the biofuel mandates that Congress put on the industry increased the prices, and about how there aren’t enough refineries to refine the crude oil.
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Clinton's Executive Fiscal Experience?

When it comes to the economy, the No. 1 issue facing America today, Sen. John McCain (R-Ariz.) has a slight edge over Sen. Hillary Rodham Clinton (D-N.Y.). And that is why we saw her attack his economic policy recently while campaigning in Pennsylvania.

“John McCain admits he doesn't understand the economy — and unfortunately he's proving it in this campaign,” Clinton told the Pennsylvania AFL-CIO union group. “After seven disastrous years of George Bush and Dick Cheney, the stakes in this election couldn't be higher and the need to change course couldn't be more urgent. But John McCain is only offering more of the same,” the New York senator said.

These criticisms from Clinton may very well be true, but voters have no reason to believe that Clinton will help the economy any more than McCain will.
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A Housing Record Worth Touting

Coaches are in tough positions. The team wins and the credit goes to the star player. Not the coach, of course, but the home-run hitter, perfect shooter or lightning-fast running back.

But if the team loses, it’s the coach who’s often assigned the blame. Washington is no different. When the housing market is playing well, it’s coach/secretary Alphonso Jackson who receives hardly any recognition for his execution strategies. But when the game got tough the blame undeservingly fell on the secretary’s head.

Now, Alphonso Jackson is a tough ol’ fella, and he’s been in this business long enough to know you often take more licks than you give. But this Sunday’s Washington Post cover story detailing his tenure as housing secretary was way out of bounds.
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A REAL Economic Prescription for What Ails Us

Both the Democratic and Republican parties need to wake up and smell the — well, not roses — of America’s economic crisis. The New York Times reports that 81 percent of Americans believe we are seriously off on the wrong track, a record in the history of polling. Consumer confidence is reaching all-time lows over the last 50 years. Wall Street and Main Street are jittery, teetering on the edge of what can only be described as a nervous breakdown.

And what did Congress and the president do to alleviate this disaster? They appropriated $150 billion to send checks for up to $600 to the bulk of Americans who qualify … hoping they will spend it. Right. When the average family has credit card debt of $9,600, maybe they need to pay off some of that debt instead of putting a down payment on another electronic device. The fundamental question, of course, is whether or not that huge outlay (adding more to the national debt) will really help the economy.
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Trading in American Competitiveness for Union Votes

Just like her superdelegates, Sen. Hillary Rodham Clinton’s (D-N.Y.) campaign staff is heading for the doors in record numbers. The latest exit stage right is chief presidential campaign strategist Mark Penn, who was forced out due to secretly meeting with Colombian trade officials while simultaneously telling the senator to continue bashing free trade. Although the New Yorker has supported free trade in the past, she has put up an anti-NAFTA façade in order to mesmerize the labor union vote and keep them pinned in her corner.

Early last week, Penn visited with Colombian leaders to discuss the pending free trade pact that Sen. Clinton (since Ohio’s primary) has criticized. While the senator supported NAFTA in her book and as first lady, she now opposes it solely to attract the liberal union vote.
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Colombia Free Trade

Dear Colombian Government,

I am sad to hear that you fired Mark Penn and his firm because Penn got caught in a political crossfire between the interests of your nation and the interests of Hillary Clinton’s campaign. OK, I lied. I am not sad. You did exactly the right thing to fire him. If you want to hire somebody who actually believes in democracy and the power of free commerce and free trade, I am available to help.

The fact of the matter is that as the oldest democracy in South America, Colombia is very important to the United States. Our history together is complicated. Our trade relationship hasn’t always been productive. Sadly, we import most of the illegal narcotics that are produced by your powerful and deadly drug gangs. The drug trade has been bad for everybody except the drug dealers. It has been bad for your democracy and it has been bad for the millions of American drug addicts who turn to crime to pay for their deadly habit.
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Tax Time

Last year, I decided to pursue a dream that I have had for a while. I wanted to work for myself. After spending a decade and a half in the Congress and a couple of years working for a large trade association, I took the opportunity to open my own strategic consulting shop.

Now, the good news about opening a consulting shop is that you don’t need a lot of overhead. I have thought about hiring a couple of employees, but I am concerned about the excess costs associated with that process.

My tax burden is one of the biggest excess costs. I get killed with taxes. I basically pay half my income to Uncle Sam. It is ridiculous.
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Heading Toward the American Derailment

Headline in The New York Times: "81% SAY NATION IS HEADED ON WRONG TRACK.”

Question to the other 19 percent: WHAT ARE YOU SMOKING?

Wherever we look, we see the American dream suffering a rude awakening.

The Constitution's promises have been frequently swept aside by heavy-handed government officials who are motivated by simple-minded expedience more than a tradition of civil liberties that is supposed to make us unique.
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A Clinton Story, Disinterred

I learned Monday, before an appearance on Fox News, of a story on their network's website I hadn't seen anywhere else — that Sen. Hillary Rodham Clinton's (D-N.Y.) campaign manager, Maggie Williams, was working until December of 2007 for Delta Financial Corporation, a predatory lender. Not only that, but Williams sat on the board of what was once one of the largest (but is now bankrupt) sub-prime mortgage lenders as one of its directors for seven years.

The Fox News story included the proverbial quotes from Clinton about the damaging effects of the sub-prime crisis and how lenders share most of the blame for the mortgage mess. "I am reminded every day as I meet with families and listen to their stories that the effective functioning of our financial markets isn't just about Wall Street. It's about Main Street," she said recently.
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