From Charles Krauthammer in the Washington Post:
A $14 trillion economy hangs by a thread composed of (a) a comically cynical, pitchfork-wielding Congress, (b) a hopelessly understaffed, stumbling Obama administration, and (c) $165 million.
That's $165 million in bonus money handed out to AIG debt manipulators who may be the only ones who know how to defuse the bomb they themselves built. Now, in the scheme of things, $165 million is a rounding error. It amounts to less than 1/18,500 of the $3.1 trillion federal budget. It's less than one-tenth of 1 percent of the bailout money given to AIG alone. If Bill Gates were to pay these AIG bonuses every year for the next 100 years, he'd still be left with more than half his personal fortune.
For this we are going to poison the well for any further financial rescues, face the prospect of letting AIG go under (which would make the Lehman Brothers collapse look trivial) and risk a run on the entire world financial system?
And there is such a thing as law. The way to break a contract legally is Chapter 11. Short of that, a contract is a contract. The AIG bonuses were agreed to before the government takeover and are perfectly legal. Is the rule now that when public anger is kindled, Congress will summarily cancel contracts?
Even worse are the clever schemes being cooked up in Congress to retrieve the money by means of some retroactive confiscatory tax. The common law is pretty clear about the impermissibility of ex post facto legislation and bills of attainder. They also happen to be specifically prohibited by the Constitution. We're going to overturn that for $165 million?
Nor has the president behaved much better. He, too, has been out there trying to lead the mob. But it's a losing game. His own congressional Democrats will out-demagogue him and heap the blame on the hapless Timothy Geithner.
Geithner has been particularly maladroit in handling this issue. But the reason he didn't give the bonuses much attention is because he's got far better things to do -- namely, work out a rescue plan for a dysfunctional credit system that is holding back any chance of recovery.
It is time for the president to state the obvious: This recession is not caused by excessive executive compensation in government-controlled companies. The economy has been sinking because of a lack of credit, stemming from a general lack of confidence, stemming from the lack of a plan to detoxify the major lending institutions, mainly the banks, which, to paraphrase Willie Sutton, is where the money used to be.
Obama has been strangely passive about this single greatest threat to the country. In his address to Congress and his budget, he's been far more interested in his grand program for reshaping the American social contract in health care, energy and education.
Obama delegates to Geithner plans for a bailout -- and Geithner (thus far) delivers nothing. Obama delegates to Nancy Pelosi and her congressional grandees the writing of all things fiscal -- and gets a $787 billion stimulus package that is a wish list of liberal social spending, followed by a $410 billion omnibus spending bill festooned with pork and political paybacks.
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Jumat, 20 Maret 2009
Selasa, 17 Maret 2009
AIG Furor Bleeds
The Washington Post is reporting that "President Obama's apparent inability to block executive bonuses at insurance giant AIG has dealt a sharp blow to his young administration and is threatening to derail both public and congressional support for his ambitious political agenda."
And it is true that "politicians in both parties flocked to express outrage over $165 million in bonuses paid out to executives at the company, demanding answers from the president and swamping yesterday's rollout of his efforts to spark lending to small businesses."
As The Post notes: "The populist anger at the executives who ran their firms into the ground is increasingly blowing back on Obama, whom aides yesterday described as having little recourse in the face of legal contracts that guaranteed those bonuses. "
Remember those words: little recourse in the face of legal contracts that guaranteed those bonuses.
For therein lies the rub.
There doesn't seem to be much that Obama can do except rant and rave.
More from The Post:
"White House press secretary Robert Gibbs, peppered with questions about why the president had not done more to block the bonuses at a company that has received $170 billion in taxpayer funds, struggled for an answer yesterday afternoon. He explained that government lawyers are 'looking through contracts to see what can be done to wrest these bonuses from their recipients.'"
Obama will try to make whatever political hay out of this he can. But the damage is ongoing. And it's contributing to a growing sense of doubt about the ability of those at the top to get on with the job.
And this, too:
House Minority Leader John A. Boehner (R-Ohio) said the bonus issue added to his belief that there will be almost no Republican support for any expansion of a bank-bailout program that passed Congress last fall with broad bipartisan support.
"What is the government's exit strategy from this sweeping involvement in private business?" he asked in a statement, adding that "taxpayers are not receiving an adequate accounting from either the Treasury or the management of the companies that received taxpayer funds. Unfortunately, we have not yet seen such a plan."
And it is true that "politicians in both parties flocked to express outrage over $165 million in bonuses paid out to executives at the company, demanding answers from the president and swamping yesterday's rollout of his efforts to spark lending to small businesses."
As The Post notes: "The populist anger at the executives who ran their firms into the ground is increasingly blowing back on Obama, whom aides yesterday described as having little recourse in the face of legal contracts that guaranteed those bonuses. "
Remember those words: little recourse in the face of legal contracts that guaranteed those bonuses.
For therein lies the rub.
There doesn't seem to be much that Obama can do except rant and rave.
More from The Post:
"White House press secretary Robert Gibbs, peppered with questions about why the president had not done more to block the bonuses at a company that has received $170 billion in taxpayer funds, struggled for an answer yesterday afternoon. He explained that government lawyers are 'looking through contracts to see what can be done to wrest these bonuses from their recipients.'"
Obama will try to make whatever political hay out of this he can. But the damage is ongoing. And it's contributing to a growing sense of doubt about the ability of those at the top to get on with the job.
And this, too:
House Minority Leader John A. Boehner (R-Ohio) said the bonus issue added to his belief that there will be almost no Republican support for any expansion of a bank-bailout program that passed Congress last fall with broad bipartisan support.
"What is the government's exit strategy from this sweeping involvement in private business?" he asked in a statement, adding that "taxpayers are not receiving an adequate accounting from either the Treasury or the management of the companies that received taxpayer funds. Unfortunately, we have not yet seen such a plan."
Sabtu, 21 Februari 2009
Here Come Tax Hikes!
The Obama tax hikes will soon be on their way.
The tax increases will be announced this week.
Income tax rates will jump to a whopping 39% - one of the highest tax rates ever.
And defense spending will drop at the same time.
On top of all that we are headed into stagflation. Shades of Carter all over again!
Here's the story from Lori Montgomery and Ceci Connolly of The Washington Post:
Even before Congress approved the stimulus package earlier this month, this year's deficit was projected by Congressional budget analysts to approach $1.2 trillion, or 8.3 percent of the overall economy, the highest since World War II. With the stimulus and other expenses, some analysts say the annual gap between federal spending and income could approach $2 trillion when the fiscal year ends in September.
Obama proposes to dramatically reduce those numbers by the end of his first term, cutting the deficit he inherited in half, said administration officials, speaking on condition of anonymity because the budget has yet to be released. His budget plan would keep the deficit hovering near $1 trillion in 2010 and 2011, but shows it dropping to $533 billion in 2013 -- still high in dollar terms, but a more manageable 3 percent of the overall economy.
To get there, Obama proposes to cut spending and raise taxes. The savings would come primarily from "winding down the war" in Iraq, a senior administration official said. The budget assumes that the nation will continue to spend money on "overseas military contingency operations" throughout Obama's presidency, the official said, but that number is significantly lower than the nearly $190 billion the nation budgeted for Iraq and Afghanistan last year.
Obama also seeks to increase tax collections, primarily by making good on his promise to eliminate the temporary tax cuts enacted in 2001 and 2003 for wealthy taxpayers, whom Obama defined during the campaign as those earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule for the 2011 tax year, when the top tax rate would rise from 35 percent to more than 39 percent.
Obama also proposes to maintain the tax on estates worth more than $3.5 million, instead of letting it expire next year. And he proposes "a fairly aggressive effort on tax enforcement" that would target tax havens and corporate loopholes, among other provisions, the official said.
Overall, tax collections under the plan would rise from about 16 percent of the economy this year to 19 percent in 2013, while federal spending would drop from about 26 percent of the economy, another post-war high, to 22 percent.
Republicans, who are already painting Obama as a profligate spender, are laying plans to attack him on taxes as well. Even some non-partisan observers question the wisdom of announcing a plan to raise taxes in the midst of a recession.
The tax increases will be announced this week.
Income tax rates will jump to a whopping 39% - one of the highest tax rates ever.
And defense spending will drop at the same time.
On top of all that we are headed into stagflation. Shades of Carter all over again!
Here's the story from Lori Montgomery and Ceci Connolly of The Washington Post:
Even before Congress approved the stimulus package earlier this month, this year's deficit was projected by Congressional budget analysts to approach $1.2 trillion, or 8.3 percent of the overall economy, the highest since World War II. With the stimulus and other expenses, some analysts say the annual gap between federal spending and income could approach $2 trillion when the fiscal year ends in September.
Obama proposes to dramatically reduce those numbers by the end of his first term, cutting the deficit he inherited in half, said administration officials, speaking on condition of anonymity because the budget has yet to be released. His budget plan would keep the deficit hovering near $1 trillion in 2010 and 2011, but shows it dropping to $533 billion in 2013 -- still high in dollar terms, but a more manageable 3 percent of the overall economy.
To get there, Obama proposes to cut spending and raise taxes. The savings would come primarily from "winding down the war" in Iraq, a senior administration official said. The budget assumes that the nation will continue to spend money on "overseas military contingency operations" throughout Obama's presidency, the official said, but that number is significantly lower than the nearly $190 billion the nation budgeted for Iraq and Afghanistan last year.
Obama also seeks to increase tax collections, primarily by making good on his promise to eliminate the temporary tax cuts enacted in 2001 and 2003 for wealthy taxpayers, whom Obama defined during the campaign as those earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule for the 2011 tax year, when the top tax rate would rise from 35 percent to more than 39 percent.
Obama also proposes to maintain the tax on estates worth more than $3.5 million, instead of letting it expire next year. And he proposes "a fairly aggressive effort on tax enforcement" that would target tax havens and corporate loopholes, among other provisions, the official said.
Overall, tax collections under the plan would rise from about 16 percent of the economy this year to 19 percent in 2013, while federal spending would drop from about 26 percent of the economy, another post-war high, to 22 percent.
Republicans, who are already painting Obama as a profligate spender, are laying plans to attack him on taxes as well. Even some non-partisan observers question the wisdom of announcing a plan to raise taxes in the midst of a recession.
Minggu, 15 Februari 2009
This Is Transparency?
From Dana Milbank at the Washington Post:
It takes a certain amount of nerve to have an event at the National Press Club and then ban the press from covering it.
It takes another level of chutzpah entirely to admit members of the general public to your event at the National Press Club, recruit a news organization as the co-sponsor and then tell the press they can't cover it.
But that's exactly what former Obama campaign manager David Plouffe and Georgetown University did yesterday [Friday].
Plouffe was listed as the keynote speaker at the luncheon yesterday for "Transition 2009," sponsored by Georgetown University and Politico. The public was invited to the event -- students free of charge and everybody else for a fee. But at the last minute, Georgetown announced that Plouffe's speech would be "closed press," even though the speech was being given in the National Press Club ballroom, described on a plaque at the door as "the sanctum sanctorum of American journalists."
National Press Club President Donna Leinwand fired off an e-mail to Plouffe and his agents stating her "strong opposition" to the press banishment from its own club. "If Mr. Plouffe wants to keep secrets," she said, "Mr. Plouffe should stay at home."
Politico editor John Harris called it "a surprise to me and an unhappy one." Harris pulled out as moderator of the speech and said his publication was disassociating itself from the luncheon.
Un-sponsoring part of the two-day event, however, was rather tricky. The Politico emblem was still emblazoned on signs outside the ballroom and on the lanyards and name tags for attendees.
This sort of mess has become a trademark of the former Obama campaign manager. Plouffe still keeps his Obama ties -- over the weekend he sent out an e-mail in his name to millions from barackobama.com titled "Urgent message from President Obama" -- yet he is also profiting from them. He is reported to have received as much as $2 million for his forthcoming book, "The Audacity to Win" . . .
It takes a certain amount of nerve to have an event at the National Press Club and then ban the press from covering it.
It takes another level of chutzpah entirely to admit members of the general public to your event at the National Press Club, recruit a news organization as the co-sponsor and then tell the press they can't cover it.
But that's exactly what former Obama campaign manager David Plouffe and Georgetown University did yesterday [Friday].
Plouffe was listed as the keynote speaker at the luncheon yesterday for "Transition 2009," sponsored by Georgetown University and Politico. The public was invited to the event -- students free of charge and everybody else for a fee. But at the last minute, Georgetown announced that Plouffe's speech would be "closed press," even though the speech was being given in the National Press Club ballroom, described on a plaque at the door as "the sanctum sanctorum of American journalists."
National Press Club President Donna Leinwand fired off an e-mail to Plouffe and his agents stating her "strong opposition" to the press banishment from its own club. "If Mr. Plouffe wants to keep secrets," she said, "Mr. Plouffe should stay at home."
Politico editor John Harris called it "a surprise to me and an unhappy one." Harris pulled out as moderator of the speech and said his publication was disassociating itself from the luncheon.
Un-sponsoring part of the two-day event, however, was rather tricky. The Politico emblem was still emblazoned on signs outside the ballroom and on the lanyards and name tags for attendees.
This sort of mess has become a trademark of the former Obama campaign manager. Plouffe still keeps his Obama ties -- over the weekend he sent out an e-mail in his name to millions from barackobama.com titled "Urgent message from President Obama" -- yet he is also profiting from them. He is reported to have received as much as $2 million for his forthcoming book, "The Audacity to Win" . . .
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