Economy & Budget

The Future

Peering through the glass darkly, it is hard to know what the future beholds.

Is the global collapse of the credit market, and the accompanying collapse of the stock market, a harbinger of bad things to come? Are we entering a truly dark period of global finance, a second Great Depression?

Or does the unprecedented cooperation of all of the world’s powers to combat this credit collapse foretell a more integrated global system, where cooperation replaces conflict?

Bailout Trumped Common Sense

With the financial markets sinking, Armstrong Williams compares the situation on Wall Street to that of his own family's experiences working a farm. Williams points out that not everyone gets a bailout, so why Wall Street?


Leading the Retreat to Reality

The winning candidates will face a real losing proposition when they actually have to take charge. They will finally have no choice but to deal with the question they've been avoiding like the plague during the campaign: How will they govern a population embittered by being suckered by its leaders? How will they inspire when the unavoidable truths come from those who were dismissed as naysayers? Will they be able to maintain a consensus while delivering a sometimes-harsh doses of reality, instead of our customary platitudes?

There are any number who can now call themselves "prophets without honor.” They are the one who have warned for decades about "profits without honor."

An Emerging Consensus?

David Broder and Joe Klein converge on a similar argument in their columns today: Barack Obama is likely to be the next president of the United States and he has yet to transition to a governing posture where he will have to share with the country the hard realities of the new economic landscape.

At yesterday’s New America Foundation panel discussion of top economists and budget experts at the National Press Club, there was a similar convergence on what the realities of that new economic landscape will look like — and it isn’t pretty.

Government-Created Jobs Will Put America Back to Work

When politicians tell voters that the government will create jobs through infrastructure programs, they do not realize that these programs may crowd out jobs in the private sector. The money for these infrastructure projects has to come from somewhere to pay for those government jobs.

When the government raises taxes to pay for “new” government-sponsored jobs, it takes that money from private businesses or consumers, thus reducing jobs in the private sector. Thus, usually, government spending does not result in a net increase in total jobs in the economy. Maintaining and upgrading our decaying infrastructure is important as an investment in our economy. It should not be a jobs-creation program but an investment program.

Sacrificing Reality

We always have to declare winners and losers. So I should point out it was a clear victory for Barack Obama that William Ayers did not attend the debate. He was not in the audience, was not part of the discussion. That's probably because even John McCain decided Ayers wasn't really relevant.

To maintain balance, I'll mention the absence of that other bomb-thrower. I mean Sarah Palin, of course. She was probably sitting in front of a TV set, watching the exchanges, listening intently as her campaign tutors explained what McCain and Obama were talking about.

There Was No Bailout; It is a Rescue Plan

Many people (including Yours Truly) were concerned that the $700 billion rescue plan was a coordinated effort to bail out the Wall Street executives whose firms contributed to the crisis that has consumed the global economy.

The more recent emergency measures by the Federal Reserve and central banks around the world since then should be evidence that the bailout was, in fact, a desperate but much-needed measure to keep the financial system intact and the infrastructure afloat. Furthermore, the abysmal performance of securities exchanges around the world serves as a good litmus test that this crisis goes well beyond the concern of executive compensation and golden parachutes.


I remember late in 1992 when George Bush the First was running against Bill Clinton. I worked for House Minority Leader Bob Michel (R-Ill.) at the time.

The Michel team was trying to help the Bush campaign any way it could. I helped to draft speeches attacking Clinton. I did some research into Clinton’s very strange to trip to Moscow during the Vietnam war. We thought he was some stooge for the KGB.

Clinton had quite clearly dodged the draft. For conservative Republicans, that was disqualification enough to be president. Clinton had extramarital affairs galore, which we thought would turn voters against him. Clinton had all kinds of strange associations, many with people who didn’t like America very much.

Waiting for Spiderman: What Would Mike Bloomberg Do? (WWMBD?)

Steve Fraser, who writes about Wall Street, noticed the other day a banner in the crowd there that said, “Jump!”

It recalls an image of 1929 that has become a conditioned reflex: Wall Street bankers, the few and the brave in 1929, losing the fortunes overnight and jumping out of windows.

In the wake of the Wall Street crash of 2008, 1929 immediately comes to mind, and with it comes visions of Wall Street jumpers, soup kitchens and long lines of the unemployed stretching around corners. And it brings a panic call for Spiderman to come and save us again, incarnate as he was in that bygone era in the person of Franklin D. Roosevelt.

We hear it everywhere. Rosa Brooks, the L.A. Times columnist, says it is time for an FDR moment.

Taxing the Rich is a Free Ride for Middle-Class Taxpayers

Voters are told by politicians that the government can raise more money by increasing taxes on the rich. However, they must follow the logical progression of the effect of higher taxes on the rich to see the true impact.

For example, increasing taxes reduces the number of jobs in the private sector. Higher taxes mean the rich have less money to spend for goods provided by the private sector and less money to invest. Less money spent in private-sector consumption means few private-sector jobs. (Housekeepers, gardeners, artists, jewelers and high-end restaurant personnel need to begin looking for new jobs!) Less money to invest means less money in the bank that can be loaned to consumers for homes. It also means less money is available for businesses to expand and hire more people.