Obama spoke Thursday at George Mason University about his American Recovery and Reinvestment Plan -- a.k.a. the stimulus package.
There’s an interesting section that would warm the heart of John Maynard Keynes. It goes like this: “It is true that we cannot depend on government alone to create jobs or long-term growth, but at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.”
Well, 28 years ago Ronald Reagan said government was the problem, not the solution. Dealing with a bad recession like this one, the Gipper lowered taxes and domestic spending. Obama on the other hand has offered an $800 billion package, with plenty of infrastructure spending that alleges to create three million jobs. Nobody really believes infrastructure spending will end the recession or create permanent new jobs.
However, it’s interesting just how much the Obama plan has changed since the election. The size has been roughly constant. But the mix of tax cuts and spending increases is now totally different. Instead of $100 billion worth of tax credits, there are now $300 billion worth of tax cuts.
This includes a big new piece for business, more cash-expensing for small-business investment, and a restoration of the five-year tax-loss carry-back, which will especially help banks and homebuilders. It might even result in tax refunds for businesses, and might also allow banks to rid themselves of toxic assets, since the losses will now be spread over many years.
So what we have now is an $800 billion stimulus package with $300 billion of so-called tax cuts which could infer less spending than before -- maybe only $500 billion worth. Obama’s economic advisers are bragging to me about their new tax-cut package.
They say they’re very pro-growth. And you know what? I acknowledge it. People like Larry Summers, Austan Goolsbee, Christy Romer, and Tim Geithner are no left-wing big-government whackos.
They may not be hard-core supply-siders. But in terms of the economics profession, I would call them center-right. And they absolutely understand the importance of private business and investment in the job-creating economic-growth process.
And I think they’re views are the main reason for the reshaping of the Obama package between the campaign trail and the eve of inauguration. The problem is that they’re not reducing marginal tax rates on large and small businesses or individuals.
Their tax credits will be two-year’s worth, not permanent. There will be no incentive effects to maximize growth. And many of the tax cuts are refundable credits, which really are a form of government spending. So it’s not a supply-side package.
However, I’ve really never met a tax cut I didn’t like. And any tax cut is better than a spending increase since private companies and individuals will at least get the money instead of government.
This is the interesting part of the Obama plan. Somewhere in there the tax cuts will have a small positive economic effect. I would have designed it differently, but then again Team Obama won the election. I guess I could say it could have been worse. Of course, Team Obama will have to contend with the sticker shock of a $1.2 trillion deficit for 2009, just printed by the Congressional Budget Office. And that’s before the Obama stimulus plan.
But I don’t think Republicans really have a leg to stand on with the deficit argument -- or for that matter the spending argument. Yes, Obama is raising the ante, and the new numbers are just about over the edge. But a lot of that new deficit is TARP money that should be scored as investment -- not real spending. And in view of all the economic pessimism out there, I doubt if the public is very worried about deficits. What’s most regrettable is that congressional Republicans have yet to make the alternative case.
They haven’t pressed for marginal tax-rate cuts as an option to Obama’s credits. So far, the GOP is me-too. They’ve offered an echo instead of a choice. Meanwhile, polls now say the public favors Obama’s plan by 55 to 65 percent.
His personal approval rating is even higher. And he’s being politically astute by reaching out to Republicans. He has virtually removed partisan rhetoric. Simply put, Obama is in the driver’s seat right now. Sure, the Democratic Congress may mangle Obama’s plan.
They might even repeal the Bush tax cuts this year. So there is considerable uncertainty about the details of the final package. But I must say, a crafty Obama is doing his best top employ his version of the Reagan tax-cut plan.
Obama talks big government. But so far his program actually reduces the government-spending share and increases the private tax-cut share.
By Larry Kudlow
Saturday, January 17, 2009
Chance of becoming America's
The man with an increasingly good chance of becoming America's first black president officially announced his candidacy on a cold Springfield morning just as newly deceased Anna Nicole Smith and newly shorn Brittney Spears inflicted serious competition for TV viewers.
Nevertheless Barack Obama, the 45-year-old son of Kenya and Kansas, has penetrated the media's foggy obsession with tabloid stars and has become, in short order, a celebrity himself. He has jump-started interest in the presidential race and zinged from something like 12 percent name recognition to being a close second for the Democratic nomination. With the campaign's starting gun only just fired, Obama is already perceived as a powerful threat to Hillary Clinton's well-funded political juggernaut and John Edwards' carefully planned strategies, and has emerged as the presumptive speaker for the conscience of the country in the 2008 presidential sweepstakes.
Many are excited just to be passionate again about a presidential campaign, even if it turns out be the classic brief dance of an underdog. But with lightning swiftness, an Obama nomination seems tantalizingly possible. Even sitting presidents can't always raise the $1.3 million taken in by the Obama campaign during a single fundraising event in Los Angeles on Feb. 20 sponsored by Hollywood moguls Steven Spielberg, Jeff Katzenberg and David Geffen.
The field reports on Obama are also impressive:
He recently addressed the largest ever pre-presidential-primary crowds in New Hampshire, Iowa, Ohio and Texas and has been endorsed by Iowa's attorney general and state treasurer -- pragmatic characters practiced at backing obvious winners in their state. The Iowa caucuses early next year will be among the nation's first electoral tests of presidential candidates. Inside the offices of MoveOn.org, there is agreement that Obama is far and away the favorite among its members and has been for the past six months. Former Senate Majority Leader Tom Daschle has endorsed him, saying that Obama "personifies the future of Democratic leadership."
Nevertheless Barack Obama, the 45-year-old son of Kenya and Kansas, has penetrated the media's foggy obsession with tabloid stars and has become, in short order, a celebrity himself. He has jump-started interest in the presidential race and zinged from something like 12 percent name recognition to being a close second for the Democratic nomination. With the campaign's starting gun only just fired, Obama is already perceived as a powerful threat to Hillary Clinton's well-funded political juggernaut and John Edwards' carefully planned strategies, and has emerged as the presumptive speaker for the conscience of the country in the 2008 presidential sweepstakes.
Many are excited just to be passionate again about a presidential campaign, even if it turns out be the classic brief dance of an underdog. But with lightning swiftness, an Obama nomination seems tantalizingly possible. Even sitting presidents can't always raise the $1.3 million taken in by the Obama campaign during a single fundraising event in Los Angeles on Feb. 20 sponsored by Hollywood moguls Steven Spielberg, Jeff Katzenberg and David Geffen.
The field reports on Obama are also impressive:
He recently addressed the largest ever pre-presidential-primary crowds in New Hampshire, Iowa, Ohio and Texas and has been endorsed by Iowa's attorney general and state treasurer -- pragmatic characters practiced at backing obvious winners in their state. The Iowa caucuses early next year will be among the nation's first electoral tests of presidential candidates. Inside the offices of MoveOn.org, there is agreement that Obama is far and away the favorite among its members and has been for the past six months. Former Senate Majority Leader Tom Daschle has endorsed him, saying that Obama "personifies the future of Democratic leadership."
Educate Yourself on Finances
As so many families suffer from layoffs and poor budgeting, there is an urgent need to regain control of our money.
One sure-fire way to accomplish this often difficult task is to re-learn, or maybe even learn for the first time, how to manage your finances from a professional.
Buyer of Services BewareWhile there are many more companies cropping up every day that claim they can help you to better manage your finances, the reality is you'll probably end up spending even more money you don't have on services that do not work.
There is no need to approach a pricey company or consultant to get your financial situation straightened out. Sometimes all you need is a refresher course.
Learn LocallyHave you checked out your local community resources lately? There are often resources that are free of charge or at least very inexpensive, where people in the community can learn various skills through a series of weekly or monthly classes, such as preparing to buy a home, scrapbooking, and even basic personal finance classes.
Look through the ads in the local paper for information or call your local agency that deals with continuing education for information. Each community will operate differently so you will need to do some homework to find out who can help you specifically.
Check In With SchoolIf the local community is not offering any classes, you can also check with the local schools and universities and see if there is any way you can sit in on some lectures at no charge.
There is not necessarily a need to enroll in an entire college course in order to brush up on your basic financial skills but some refresher information may not be a bad idea.Each person's financial situation is different but there are some general knowledge topics that should be a part of everyone's financial know-how, such as constructing a budget, investing, and savings plans.
If you are not comfortable with these subjects, then get the answers you need and formulate a plan that works for you - so you are more inclined to stick with it.
Hit The NetIf all else fails, check around the various personal financial websites and blogs, including our prestigious site, for tips and personal stories of others who have gone through similar financial situations and have figured out a way to make it work.
Read as much as you can and re-educate yourself on the information you may have forgotten or just never learned in the first place. It is never too late to find a better, more efficient way to handle your finances responsibly and get out of debt.
By Tisha Kulak Tolar
One sure-fire way to accomplish this often difficult task is to re-learn, or maybe even learn for the first time, how to manage your finances from a professional.
Buyer of Services BewareWhile there are many more companies cropping up every day that claim they can help you to better manage your finances, the reality is you'll probably end up spending even more money you don't have on services that do not work.
There is no need to approach a pricey company or consultant to get your financial situation straightened out. Sometimes all you need is a refresher course.
Learn LocallyHave you checked out your local community resources lately? There are often resources that are free of charge or at least very inexpensive, where people in the community can learn various skills through a series of weekly or monthly classes, such as preparing to buy a home, scrapbooking, and even basic personal finance classes.
Look through the ads in the local paper for information or call your local agency that deals with continuing education for information. Each community will operate differently so you will need to do some homework to find out who can help you specifically.
Check In With SchoolIf the local community is not offering any classes, you can also check with the local schools and universities and see if there is any way you can sit in on some lectures at no charge.
There is not necessarily a need to enroll in an entire college course in order to brush up on your basic financial skills but some refresher information may not be a bad idea.Each person's financial situation is different but there are some general knowledge topics that should be a part of everyone's financial know-how, such as constructing a budget, investing, and savings plans.
If you are not comfortable with these subjects, then get the answers you need and formulate a plan that works for you - so you are more inclined to stick with it.
Hit The NetIf all else fails, check around the various personal financial websites and blogs, including our prestigious site, for tips and personal stories of others who have gone through similar financial situations and have figured out a way to make it work.
Read as much as you can and re-educate yourself on the information you may have forgotten or just never learned in the first place. It is never too late to find a better, more efficient way to handle your finances responsibly and get out of debt.
By Tisha Kulak Tolar
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