A pretty good interview with BU economics professor Laurence Kotlikoff. I’ve honestly never heard of him before but, based on this interview, Joe Biden may want to put him on a watch list of some kind. The clip is about 13 minutes in all, but I’m jumping ahead to the last 4 minutes which is pretty sobering: I’d love to hear a debate between Professor Kotlikoff and Paul Krugman. I [...]
John on August 6, 2011 at 4:04 am
Standard & Poors has downgraded US debt from AAA to AA+ with a warning that a further downgrade could be mass within the next two years.
S&Ps justification letter takes a very politic approach, blaming both parties for the outcome:
We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.
The letter returns to this leitmotif about taxes and entitlements several more times, for instance:
It appears that for now, new revenues have
dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.
I actually think the supposed even-handedness here is a gift to Democrats. Based on the figures for the Bush tax cut extension signed last December, we know that the Treasury expected tax cuts on those earning over $250k to reduce revenues by about $40 billion a year. That means that ending these cuts could bring in about $400 billion over ten years. Would changing the debt deal reached this week from $2.8 trillion to $3.2 trillion have made that much of a difference? I don’t think so and there’s no evidence in this letter that S&P would have either.
On the other hand, our entitlement problem involves trillions of dollars over the next ten years. Medicare alone could add nearly as much to our debt as the entire deal signed this week. So the idea that these two items are of equal significance to the long term outlook is ridiculous. To be clear, S&P never says they are equally important, but the letter seems to imply as much by repeatedly mentioning them together. The reality is that new taxes on top earners will make a small difference. Entitlement reform is where the real action is.
There is one bit in the letter that struck me as surprising. In this section S&P seems to be predicting a US lost decade:
the revised [Bureau of Economic Analysis] data highlight the sub-par path of the current economic recovery when compared with rebounds following previous post-war recessions. We believe the sluggish pace of the current economic recovery could be consistent with the experiences of countries that have had financial crises in which the slow process of debt deleveraging in the private sector leads to a persistent drag on demand. As a result, our downside case scenario assumes relatively modest real trend GDP growth of 2.5% and inflation of near 1.5% annually going forward.
This is just one scenario but I think at this point the administration would be thrilled to see 2.5% growth.
John on August 5, 2011 at 4:02 pm
The scope of this fast and furious scandal is pretty amazing. Ace has a good summary of what we know. Click over to read the whole thing but here’s a sample:
Let’s see if I have this straight:
The smartest administration in the history of the world conceived of this plan.
The plan was to just let thousands of weapons flow to murderous drug cartels.
And then take those cartels down.
But they didn’t take the cartels down, because they didn’t track the guns.
They instead were to follow the money, but they also didn’t do that.
A US border agent was killed due to the illegal arms sent to a neighboring sovereign country in this massive covert operation.
In addition, so was the brother of a Mexican attorney general.
Has anyone been fired for this disaster? How about arrested?
John on August 5, 2011 at 11:50 am
I’m heading out toward Phoenix and the Grand Canyon for about a week. I will be updating the blog while I’m gone but posting will be lighter than usual next week.
I’m renting a 32′ motor home for the whole family. It’ll be my first time driving a beast this big. Fortunately my neighbor gave me a chance to drive his 40′ around the area and gave me a few pointers. I think I’ll do okay.
So I hear it’s hot in the desert this time of year. Hopefully this will be fun anyway.
John on August 5, 2011 at 9:11 am
This is a bit like watching the boy wonder take on Batman. Santelli is clearly none too fond of Klein’s implicit statement that there are just and unjust moves in the free market. Rather than accept the premise coded into Klein’s question, Santelli simply rejects it as nonsense:
I only wish he’d called Klein out on his new theory that Congress and the President can’t do much to fix the economy. That’s not what he was saying back when he was defending the stimulus bill.
John on August 5, 2011 at 5:19 am
The Daily Mail reports this is the third Iranian nuclear scientist to be assassinated in the past year:
The two assassins arrived from nowhere as their victim was driving home with his wife. Trapped inside his car, he was hopelessly vulnerable as their motorcycles pulled alongside.
He would just have had time to notice their blacked-out visors before they opened fire, emptying round after round into his chest.
The likely culprit is Israel’s intelligence service, the Mossad:
Of course, Israel denies any connection with these deaths. But intelligence experts are convinced Mossad is behind them, sometimes carrying out the killings in conjunction with like-minded intelligence agencies, including the CIA.
I wonder if the President approved this plan?
John on August 5, 2011 at 1:44 am
As bad as many Senate and House Democrats think the deal was, they had hope that the 2nd half as dictated by the Super Committee was going to be better. That’s because the Senate Democrats worked out a doomsday scenario they were certain would be unpalatable to Republicans. Should the parties fail to reach an agreement automatic cuts kick in including deep cuts to the military.
Harry Reid was seen crowing about this strategy immediately after the deal was signed. However, just a couple days later both Leon Panetta and the President seem to be stealing Sen. Reid leverage:
The fact that Panetta mouthed the words about revenues doesn’t really matter. The plan is to force Republicans into a corner with the prospect of slashing military spending. How can he pursue this if both the Pentagon and the President won’t back his play?
Category: Politics |
John on August 4, 2011 at 3:41 pm
“Suffice to say that you won’t see a repetition of what happened last week, taking us to the last minute when they didn’t even have the votes — they didn’t even have the votes — and then saying to us ‘You will be responsible for a default,” Pelosi said in response to a question from TPM.
Pelosi was reluctant to spell out just how she would stave off this situation, however. “I would say that if I were to tell you…it would be defanged,” she said, after being pressed for details…
“[W]e wouldn’t let our country default,” Pelosi said. “But I’ll say it this way to you. A default is a much more serious consequence than a shutdown of government for a few days.”
I recommend clicking over and reading all of his post, but for now here’s Andrew Stiles take on the secret plan:
It would seem that Pelosi is suggesting that House Democratic leaders plan to aggressively whip their caucus against any negotiated compromise that they find disagreeable, thus putting pressure on House Speaker John Boehner (R., Ohio) to pass future spending deals with only Republican votes, which has proved a rather difficult task. Furthermore, she indicates that Democrats would be willing to suffer the consequences of their actions (e.g. a temporary government shutdown). It’s hard to believe they would realistically be able to pull this off, especially if it would mean giving President Obama the cold shoulder. But it’s possible to see how House Democrats could become a complicating factor once the congressional super-committee is formed and in the event that it puts forward a deficit reduction plan that would need the approval of both houses of congress to be enacted.
He may be right that this is her plan, but I’m not convinced. Seems to me this is pretty much what Democrats did in voting down each plan that the House sent to the Senate, thereby trying to put the pressure back on Boehner. Obviously that didn’t work the way they hoped so I’m not sure how doing much the same thing again would constitute a new strategy. Furthermore, I’m not sure how telling reporters about the plan would spoil the surprise. Again, this is very similar to what they’ve been doing already.
So here’s my theory and I concede up front that it’s just a theory. There is another way to shut down the government that was used recently by Democrats. Remember what happened in Wisconsin a few months ago? To prevent passage of a bill they disliked, Democrats fled the state and denied Republicans a quorum. They were supported in this at the national level by people like Dick Durbin. Would they try this at the national level?
Perhaps there are some experts out there who can confirm whether or not this would work in the House. I’m just guessing it would. If Democrats simply fled Washington and refused to allow votes that would be a government shutdown of a kind and it would certainly be a somewhat surprising move, one that would be spoiled if Republicans were expecting it.
What do you think? Will Democrats once again become fleebaggers if they don’t get their way?
John on August 4, 2011 at 3:02 pm
Interesting insights on the growing trend:
Did we know that Fatah supported this sort of thing? Probably so, but it seemed to me that these attacks were always blamed on Hamas.
John on August 4, 2011 at 1:26 pm
It looks like the chaos the administration was counting on has finally arrived albeit a week late:
The Dow lost over 500 points today which brings us to right around 750 points so far this week. Are we looking at a Black Friday tomorrow or has the correction played out?
Jay Carney is blaming the dive on “global issues” which is no doubt true to some extent. The real question of course is how this dip relates to the debt limit debate we just went through and the threat of a possible downgrade to come. Carney seems to be saying the deal helped, but the markets seem to be saying not-so-much.
The person hit worst by this has to be DNC Chair Debbie Wasserman-Schultz who just yesterday was extolling the President’s work on the economy on national TV (note this audio is a bit hot so adjust speakers accordingly):
John on August 4, 2011 at 12:47 pm
This is the kind of smart analysis that you regularly see on blogs (both left and right) but which rarely appears in mainstream media outlets. Kudos to Erik Wemple and the Post for this:
Biden himself later told CBS’s Scott Pelley: “I did not use the terrorism word … And I never said that they were terrorists or weren’t terrorists.” Politico updated its piece with that quip, and at least one news outlet (mis)interpreted it as a denial. Neither Barkoff’s statement nor Biden’s, of course, approaches airtightness, for the following reasons:
* Saying that the vice president doesn’t believe “terrorists” is “an appropriate term in political discourse” leaves aside the question of whether he said it. On appropriateness, Biden’s an unreliable source, too: This gaffe factory doubtless sees a lot of his past statements as inappropriate for political discourse.
* No one has alleged that he used the “terrorism” word. The allegation relates to a different word, “terrorists.”
* Biden appears to be flirting with categoricalness when he states that “I never said that they were terrorists…” But hold on: the Politico account doesn’t say that Biden “said that they were terrorists”; it says only that he argued that they’d “acted like terrorists.” A simile’s difference.
As Wemple goes on to note, the VP’s office never asked for a correction and wouldn’t even tell Wemple why they didn’t. That should tell you all you need to know about this denial.
But Wemple goes even farther, indicting the legacy media that refused to cover this story:
The combo of anonymous sourcing behind the Politico story plus a quasi-denial on part of the vice president appears to have steered other prominent media outlets away from the mention of “terrorists.” A Nexis search of the New York Times turns up no mention of the incident in its news pages. The Washington Post’s news operation largely stayed away, though its opinion side gave it much rotation. MSNBC doesn’t appear to have given it prominence, either.
The excuse given by a NY Times editor on why they chose to ignore it is priceless. Bottom line, we don’t print unconfirmed reports. That would be true if he’d simply added the words “that damage Democrats.” As it stands, it’s a joke as Karl in Hot Air’s Green Room points out in some detail.
John on August 4, 2011 at 12:06 pm
Speaking of Chris Christie…He spoke at the Iowa Education Summit on July 25. As usual he makes the case better than anyone else. The entire clip is worth watching but I’ll skip about halfway in to the best part:
I appreciate his willingness to talk about failure as distinct from blame. What’s clear though, and I believe Christie knows this as well as anyone, is that the practices of teacher’s unions are largely to blame for this failure. Because of them we have tenured teachers who can’t teach but who can’t be fired. Because of them, we have “rubber rooms” full of teachers who ought to be fired but instead get paid to not teach, sometimes for years at a time. Because of them we have school districts teeming with bureaucrats and administrators who add unnecessary overhead to public education.
But again, what’s great about Christie is he can know all of that, not just in abstract but in a personal way, and still give a calm, cool and collected speech like this which persuades rather than polarizes. He’s a great communicator and I use that phrase advisedly. I only wish he’d reconsider his decision not to run for President. We desperately need him now.
John on August 4, 2011 at 11:38 am
Jim Vandehei and Mike Allen have a pretty tough look at Obama’s reelection chances up at Politico. A few highlights:
Obama’s team is concerned about the factors beyond its control, talking of an imminent need to retool their economic message and strategy heading into 2012. Absent the president’s ability to defy political gravity, one Obama adviser conceded, “The numbers add up to defeat.”
Then there’s this bit about unemployment:
No president has won reelection when unemployment was higher than 7.2 percent in 50 years.
It’s beginning to sound like Obama 2012 is the Spanish Armada, but Vandehei and Allen just keep piling it on:
By the time the next election rolls around, the government will have taken on almost $7 trillion in debt under Obama. It’s hard to explain away a number so big.
These are just a few highlights from a six page story. There’s lots more and all of it is worth reading. Finally, there’s one more nugget I’m not sure I knew about until now:
At a private meeting the billionaire founder of Home Depot arranged last week between wealthy donors, including some Democrats, and Christie, the main rant in the room was that Obama was hostile to free markets and needed to be stopped.
Maybe someone can prevail upon Christie to reconsider a run. I’ll say again that he is the one Republican who could nullify all of Obama’s remaining advantages, i.e. charm, confidence, rhetorical facility. I believe Christie can beat Obama in 9 out of 10 debates. He doesn’t always use the same soaring rhetoric but he’s a much better extemporaneous speaker than the President. Get them in a room without a teleprompter and the President is in deep trouble.
John on August 4, 2011 at 10:00 am
Update 1pm: Harry’s bluff has been called. After this disastrous press conference yesterday, Sen. Reid has suddenly decided to pass a short term extension which was already on offer. Coincidence?
Over at the Daily Caller, C.J. Ciaramella has a story about a testy press conference held yesterday by senior Democrats. The ostensible issue for the presser was the FAA shutdown, but during the 30 minute appearance, which included Sen. Reid, Sen. Schumer, Rep. Hoyer, Sen. Rockefeller and Sen. Boxer, it became apparent the real issue was pushing a political meme, i.e. Republicans are hostage-takers. This became explicit during the Q&A.
Let’s begin at the beginning with Rep. Steny Hoyer, the minority whip in the House, setting the tone:
Rep. Hoyer used the word “hostage” two more times before he finished speaking. Next up was Sen. Boxer who used the same metaphor three times and explicitly endorsed what Hoyer had said. She also makes a gaffe calling Hoyer “leader” which she plays off by saying that in her mind Nancy Pelosi is still Speaker:
Then came Sen. Schumer who went beyond using the descriptor “hostage-takers” to making more of an extended analogy. He doesn’t use the word terrorist here but that’s clearly the picture he is painting:
After the press conference proper there was a Q & A which immediately became contentious when a reporter (Johnathan Karl) asked why Democrats wouldn’t accept a version of an agreement proposed by Republicans. Just a few minutes earlier Steny Hoyer had said that the government had no business getting involved in a labor issue, but in response to this question a visibly irritated Harry Reid announced that the real issue was a labor demand that Democrats refused to accede to, everything else was a smokescreen:
But as you’ll see, Sen. Schumer then tried to redirect this by saying that the really real issue for this press conference wasn’t labor relations but unfair negotiating by Republicans. He gets pretty explicit with a gun metaphor here and, listening to him, it’s hard to avoid the conclusion that this really was the point behind this entire exercise. The FAA shutdown was just a pretext for senior Dems to try out a new talking point:
I won’t bore you with it, but Sen. Boxer, Rep. Hoyer and Sen. Rockefeller all made statements confirming that Republicans negotiating behavior was the real point they were trying to make with this presser. Testy Harry Reid waved his hand at reporters in the room and said they were “falling for it” which led to an equally irritated reaction from the room.
In all, the five Democrats used the phrase “hostage-taking” a dozen times. If this was a trial balloon for a new talking point, it doesn’t seem to have gone very well.
Category: Politics |
John on August 4, 2011 at 2:05 am
Maybe you’ve seen articles saying that the ratings agencies were likely to downgrade America’s debt whether or not an agreement was reached on raising the debt ceiling. I’ve seen several pieces that led me to believe a downgrade was all but inevitable.
That may still be the case, but there is some reason to think the ratings agencies may be hesitant to downgrade the US. First, the head of S&P claimed his analysts were misquoted about the necessity of a $4 trillion deal. In the clip below (about 2 1/2 minutes) he suggests that while a $4 trillion deal would have preserved the triple-A, it’s possible that something less would as well:
But in case you’re tempted to breathe a little sigh of relief and assume it’ll all be okay, listen to this sobering assessment from investors Jim Rogers who has moved to Singapore so his children can grow up speaking Mandarin:
Update: No sooner do I publish this than I see Ace’s post suggesting Moody’s is serious about a downgrade. I guess we’ll see how serious.