Category archives: Economics

The Pro-Obama Attack Machine Rolls On

by Chris Gacek

March 11, 2009

The New York Times jumped into the fray on Monday to help rescue President Obama’s economic policy-making reputation.  This was done in the guise of an analysis piece on the cable business channel, CNBC, that also served as a shot across the bow.  The story by Brian Stelter and Tim Arango entitled, “CNBC Thrives as Hosts Deliver News with Attitude,” lets the cat out of the bag when it intones: “CNBC is now a place for politics…. making the line between reporter and commentator almost indistinguishable at times.”

            What follows is a grab-bag of faux concern for CNBC’s brand and its reputation for journalistic integrity.  Some anonymous back-biting by three CNBC employees is added for good measure.  Blah, blah, blah.  But the rub comes down to this:  “In recent weeks some have perceived the network to be leading the campaign against President Obama’s economic agenda.”  BINGO.

            Well, the folks in the mainstream media (MSM) are clearly irritated because CNBC is now the most important news organization driving the political-economic debate.  The MSM is beginning to realize that it cannot control a news network populated by the brightest reporters on TV and accomplished guests who focus on the hard logic of the markets, interest rates, stock prices, currencies, etc.

            After Rick Santelli, a CNBC reporter from Chicago’s mercantile exchange, blasted the Obama Administration’s mortgage rescue plan he was attacked by NBC’s Matt Lauer on the Today Show.  Similarly, Jim Cramer was dragged to the Today Show for a hazing by Lauer who had to be assisted by CNBC’s Erin Burnett.  Even she couldn’t make it a fair fight.  Cramer just brushed them off.

            Unfortunately for the MSM the news broadcasts on CBS, NBC, ABC, PBS, CNN, and MSNBC are populated with reporters who know relatively little about economics and finance compared to their counter-parts at CNBC, Bloomberg, and Fox Business Channel.  So, when someone like Lauer tries to slime Santelli or Cramer he is totally mismatched.

            This means that serious interviews on the economy now have to be conducted on CNBC.  Yesterday’s interview of Warren Buffet by CNBC’s Becky Quick is a case in point.  Aside from the two-hour length, that interview would not have been possible on the MSM networks.  There are no broadcast TV analogs to Ms. Quick, Joe Kernen, and Carl Quintanilla who are all very, very bright and industry savvy.

            This is not to say that CNBC is perfect.  It has its flaws.  Big Deal.  However, between the network’s excellent morning (“Squawk Box”) and evening shows (“The Kudlow Report” hosted by Larry Kudlow) one becomes engaged in an ongoing conversation about our nation’s political-economic-financial situation.  The point isn’t that CNBC hosts and guests don’t make mistakes or erroneous predictions.  Who hasn’t in this market?

            The point is that CNBC presents its viewers with a window into an ongoing high-level conversation between many of the best minds on “Wall Street” as they try to diagnose and solve the enormous problems we face.  It has been fascinating to watch many themes developed and analyzed over an extended period of time on CNBC.

            This is all to say, that the MSM is incapable of presenting the public with this type of sophisticated, repetitive “longitudinal” analysis that makes it possible to think through the various problems the markets face.  And, with all due respect to the snooty journalism professors who love the Times, this is great journalism.

            Finally, regarding the charges of being political, as Larry Kudlow said Tuesday night to Charlie Gasparino (another CNBC reporter under attack) - (paraphrasing) “I learned a long time ago that if the liberal pundits are coming after you, you must be doing something right.”  Amen, Brother Larry.  Praise the Lord and pass the ammunition.

An Open Letter to Larry Kudlow, the Nation’s Irreplaceable CNBC Host

by Chris Gacek

March 5, 2009

Dear Larry:

The Politico reported yesterday “it’s rumored that [Senator Christopher Dodd (D-CT)] could face a challenge [in his 2010 Senate re-election race] from CNBC host Larry Kudlow, an opponent who would focus the coming election squarely on the economy.”

Say it ain’t so, Kudlow.

For those not familiar with you, Larry, I provide two links with some fair and balanced info: CNBC, Wikipedia. In short, you are a supply-side economist who served in the Federal Reserve Bank of New York, the Reagan Administration’s Treasury Department, and various Wall Street firms with distinction. You are a happy guy; an optimist. You are a conservative, and, as I have observed over the years, a much-needed media friend of the pro-life cause - something we at FRC appreciate greatly. And, since the financial meltdown you have been hosting a M-F 7:00 p.m. hour-long market analysis program on CNBC - now called The Kudlow Report.

In my opinion, The Kudlow Report has become the most important news program in America since the financial crash hit in September 2008. Given the deep recession we are experiencing it is understandable that an economy-focused program would reach such prominence. However, I am sure your ratings do not come close to measuring your impact on American politics, but I believe that I am correct.

As a conservative moderator you have exposed the Bush (bad) and the Obama (failing) economic responses to the financial crash to systematic analysis by many of the best thinkers on Wall Street. You provide this invaluable service on a daily basis with great intellectual rigor. What is crucial here is that a supply-side (non-Keynesian) supporter of free markets has this prominent role on America’s foremost business channel. As long as the current economic recession remains unabated, The Kudlow Report will remain the most important source of news on the economy.

This brings me to the alarming rumors of your potential Senate race. I write to urge you to reject any attempts to entice you to run for the Senate in Connecticut.

First, let’s assume that you run and defeat Senator Dodd. Under that scenario, it is fair to say that as a junior senator from Connecticut - in the minority (the GOP cannot take back the Senate in 2010) - you would have no chance of attaining the level of influence you now enjoy on CNBC. Being well down the pecking order in a body of 100, you may be able to get a seat on the banking committee, and you would be able to accomplish some good in the Senate: perhaps an amendment here and there; some oversight questions on TV. Not much to compare with being able to teach the nation about core conservative economic principles every evening while assessing the events of the day and interviewing newsmakers.

Second, the chances are not great that you will defeat Senator Dodd. Yes, he has some vulnerabilities on housing and mortgage policies. That said, he is in his fifth term, and his father was a two-term U.S. Senator from Connecticut. The state is very liberal. Connecticut is unlikely to elect someone who would now have difficulty winning a seat in New Hampshire. In sum, you will most likely lose the race, but the costs would be greater than those associated with a failed campaign - lost time, treasure, and effort.

The greatest cost would come from your absence from CNBC. This would be a heavy price to pay because the nation needs daily access to someone guided by sound doctrine analyzing economic and financial developments. This is the job for which your lifetime of work and training has prepared you - not sitting in the Senate. It is no small responsibility to provide accurate economic news to the people of the United States in the worst recession since the 1930s. Unless you stay focused on the task at hand there is little chance that the American people will receive via cable or television the high-quality analysis of Obama Administration policies that they deserve for 2010 and 2012.

Best wishes,

Chris Gacek
Family Research Council

Been in D.C. Too Long?

by Chris Gacek

February 24, 2009

How do you know that you know way too much about Washington bureaucracies and how they “work”? Here’s how. When you hear CNBC’s Rick Santelli calling for a Chicago Tea Party tax protest this summer, you immediately start to wonder whether he’ll need to get permits from some government entity like the Environmental Protection Agency. And then you wonder whether Illinois permits will be needed also. Well, I plead guilty to having had such thoughts last Thursday.

Fortunately, I am not alone and not nearly as bad off as Scott Ott of the D.C. Examiner appears to be. Ott has written a brilliant, hilarious piece entitled, EPA Arrests Rick Santelli, ‘Chicago Tea Party’ Cancelled.” (See Feb. 24, 2009 ed., p. 14.) The satirical article contains the following slam from President Obama’s press secretary, Robert Gibbs, commenting on Santelli’s arrest for threatening to pollute Lake Michigan: “I don’t know where Mr. Santelli lives, but apparently, like most conservative critics, he has a callous disregard for the lives of the waterfowl, sturgeon and fresh-water mollusks that inhabit the Lake Michigan watershed.”

That’s funny, but I wouldn’t be surprised if Santelli really could be arrested for dumping tea or “derivative securities” (paper) into the Great Lakes. Well done, Mr. Ott.

Andie Coller of The Politico observed today that Gibbs “dismissed [Santelli] as a know-nothing derivatives trader out of touch with Main Street.” Coller then noted that “[a] Rasmussen poll released Monday found that 55 percent of those surveyed thought federal mortgage subsidies to those most at risk of losing their homes would be ‘rewarding bad behavior.’” If I were the White House I would be very careful about trying to roll out a campaign of intimidation and bullying against journalists, in general, and a journalist, in particular, who is very much attuned to public sentiment, is an expert in the numerous cross-cutting markets traded in Chicago, and is the most popular figure on America’s #1 financial news network.

Steering the Elephant

by Robert Morrison

February 20, 2009

Some governors might reject funds,” blared the headline in USAToday. The story detailed the fact that about $144 billion of the huge $787 billion “stimulus” package President Obama signed this week will go to the states.

Massachusetts Gov. Deval Patrick (D) was not one of those governors, most of them Republicans, who were leery of the gift horse Washington was promising their states.

Still, Gov. Patrick said the $9 billion slated for the Bay State would “not be a panacea.”

Not a panacea, but maybe a Pandora’s Box. South Carolina’s Gov. Mark Sanford is head of the Republican Governors Association. He warns about the impact of programs funded by this sudden windfall from Washington. “You get this huge slug of money. It funds programs for a couple of years, and then what? You get it started, you get a constituency established, and then we’re supposed to yank the rug out from under people when the federal money runs out?” Alaska Gov. Sarah Palin (R) echoed Sanford’s concerns: “It’s not fair to Alaskans,” she said, “to create programs that won’t be sustainable.”

Texas Gov. Rick Perry (R) pointed to the “mile long strings” attached to the federal funds. Those strings may prove to be chains in the long run. Some of the funds will go for bridges, roads, tunnels, and other important and lasting parts of the infra-structure. Too much of it will for wasteful projects. The “stimulus” has been likened by columnist George Will to “drowning by fire hose.”

One part of the federal funding jumps out at pro-lifers: Medicaid funding. In seventeen of our states, tragically, taxpayers are forced to pay for abortions. Will this new wave of federal funding result in more money for abortion in the states? How terrible it would be if this attempt to “jump start” economic recovery were to help kill America’s future generations.

Even as we fight to preserve the Hyde Amendment that bans federal funding for abortion, the fact remains that monies are fungible. Americans recognize that if some Wall Street fat cats are being bailed out by taxpayers, it won’t do to say that their executive retreats to some posh watering holes were paid for by corporate funds, not taxpayer dollars. Americans understand how the executives simply take the money from one overstuffed pocket and jam it into the other. The same is true for state-mandated abortion funding. If the feds don’t fund abortions directly, they free up money in state budgets for this misuse of funds.

The other danger of these strings attached is that the states will lose their proper relationship to the federal government. James Madison and the other Framers gave us a system of checks and balances. Powers were separated at the federal level-legislative, executive, and judicial-but they were also divided between federal and state governments. This recovery package threatens seriously to uncheck those checks and unbalance those balances.

I vividly recall when I reported for duty at the U.S. Department of Education under the Reagan administration. I was assigned to a career civil servant for orientation. Dr. Ed was a highly intelligent, highly motivated, and thoroughly liberal bureaucrat. Dr. Ed took me to each of ten offices at USED. At each, he underscored his points by telling me that he and his fellow “educrats” could not possibly be responsible for all the nonsense in the nation’s classrooms that conservatives complained about. “We only provide seven percent of all education funding,” Dr. Ed told me over and over, “just seven percent!”

I followed Dr. Ed like a lamb for that first week. But when orientation was over, I told him a lesson my dad had taught me. “Pop” was in the Merchant Marine and had sailed off to India. There, he saw how the mahouts train their elephants. The mahout is a little fellow who weighs just seven percent of what the elephant weights, but he has a stick with which he prods the elephant behind the ears. With that stick, the elephant soon learns to go where the little mahout sends him.

That’s the way it is with federal funding. Except that now, our federal mahout has a much bigger stick with which to prod our fifty state elephants.

No Deal on This New Deal

by Tony Perkins

February 19, 2009

In a cedar chest at my home is a woolen thermal shirt. This is not just any thermal shirt; it is a part of history and a reminder. The shirt was a government issue, given to my grandfather. As a young man during the Great Depression, he worked with the Civilian Conservation Corps planting trees, building parks, and working on other public conservation projects. My grandfather earned a dollar a day.

The debate still continues among economists as to whether or not those vast public works projects that President Roosevelt launched through the CCC and the Works Progress Administration (WPA) along with other government spending helped end the nation’s worst economic crisis.

Regardless, FDR’s New Deal and the opportunities that it offered were significant to the many struggling families who were unemployed during a time when unemployment stood at almost 25%. Between 1935-1943 over 8 million Americans were on the payroll of the WPA alone.

FDR’s actions were controversial as he took the counterintuitive approach  promoted by English economist John Maynard Keynes to increase government spending during hard economic times. They called it “priming the pump.” FDR’s efforts led to a radical and lasting expansion of the power and reach of the federal government.

Parallels have been drawn between the New Deal and the present government response to the financial crisis - but there are vast differences. The stimulus measure signed by President Obama this week, which according to estimates by the Congressional Budget Office will cost about $1.3 trillion, will, according to the President, preserve or create 3-4 million jobs. Keep in mind that adjusted for inflation this stimulus measure will probably cost 3 times what the New Deal cost.

The overall cost of government spending designed to revive the economy will go even higher as the President announced a mortgage bailout this week that could cost up to another $250 billion dollars.

There is a vast difference between spending government money to create short-lived public works jobs and expanding the size and scope of federal agencies and directly bailing out bad mortgages. It may sound simplistic, but a government inspired hand up is much different than a government handout, and the implications will be lasting and far reaching, not only on the size of government but also on the American ethic.

The effect of FDR’s economic philosophy was so pronounced that 30 years later in 1971, President Richard Nixon said “We’re all Keynesians now.” The impact of this present economic approach is even more powerful — so much so that before it has even been implemented, a recent cover story of Newsweek declared: “We are all Socialists Now.”

MUST SEE TV: CNBC’s “House of Cards”

by Chris Gacek

February 14, 2009

Keep an eye out for an amazing documentary on CNBC called “House of Cards.”  (It will be showing numerous times this weekend.)  David Faber narrates a two-hour program on the current financial-economic recession and its origins in mortgages, securitized debt instruments, the dishonest or incompetent rating of those instruments, and governmental incompetence.  Greed, fraud, stupidity, and recklessness are all on display.  It is an excellent program that is a nice introduction to what happened to our economy.

To me one person stood out above all the rest: “The Maestro,” Alan Greenspan, former U.S. Federal Reserve Chairman.  Watching Greenspan make excuses for his non-stop money printing in the early 2000s makes it clear that this guy had no business being in that job.  He essentially admits that he made no effort to control the Fed’s credit expansion because it wasn’t what the political powers in Washington wanted.  This is the problem with having a politician, like Greenspan, as Fed Chief.  The Fed was designed to be insulated from political decision-making; his job was to make the tough choices and control credit.  Instead, he threw up his hands and cranked up the presses.  Disgraceful.

Economists from the Austrian School knew Greenspan’s policies were dangerous.  Read this before-the-crash assessment of his Fed tenure by Stefan Karlsson from the Ludwig von Mises Institute website.  Greenspan’s philosophy was not deregulatory.  No group of economists is more deregulatory than the Austrian School, but they are also committed to price stability and tight money.  Don’t be fooled if someone tells you Greenspan was a conservative; he wasn’t.

Stimulus” Update

by Family Research Council

February 13, 2009

The House passed the Stimulus bill with all Republicans and 7 Democrats voting against it (except for two Republican absences who would have been NO and one Democrat, Rep. Lipinski, (D-Mich.) who voted PRESENT)

The Democrats voting yes (or switching from the last vote):

5 switched NO to YES: Reps. Boyd (D-Fla.), Cooper (D-Tenn.), Ellsworth (D-Ind.), Kanjorski (D-PA) and Kratovil (D-Md.)

6 stayed NO: Rep. Bright (D-Ala.), Griffith (D-Ala.), Minnick (D-Id.), Peterson (D-Minn.), Shuler (D-N.C.) and Taylor D-Miss.)

1 switched YES to NO: DeFazio (D-Or.)

Representative Boehner gave an impassioned speech (no crying though) on the House floor, you can watch it here

Senate update:

The Senate will vote at 5:30 pm tonight on the Stimulus Conference Report. The vote will be on a motion to waive the budget point of order (must achieve 60 votes) and under the order the vote on the motion to waive will count as final passage of the conference report.

Keep in mind this vote will be held open for a bit in order for all Members to have a chance to record their vote.

That 78-cent Bogus Bill

by Robert Morrison

February 11, 2009

With great fanfare, President Barack Obama last week signed his first bill.  The White House was the backdrop for a celebratory East Room signing ceremony.  The bill, backers acknowledge, “overrules a Supreme Court ruling.” The subject was a favorite of feminists: equal pay for equal work.  Now, the sight of a roomful of liberals cheering when Congress and the President overrule the Supreme Court ought to make any of us happy.  But I wish the President had not repeated that old feminist line:  women make just seventy-eight cents to every one dollar men make. 

The fact is true, but it is also misleading.  Liberals claim that it is because of job discrimination that women are relatively disadvantaged.  This is not the case.  The reason that the average woman earns 78% of the what the average man earns is because the average woman spends part of her adult life outside of the paid workforce or working only part-time (generally while bearing and raising children), whereas the average man works full-time for all or nearly all of his adult life. And there is no injustice in paying workers (whether male or female) more money when they have more work experience.

On the very day the President made his East Room statement, my daughter called me to announce she was quitting her job.  Despite her fine education and her excellent promotion prospects, my daughter and son-in-law had decided that she would stay at home with their newborn son.  I thanked God for their decision.  Our daughter was exercising her freedom to choose.  I thought liberals were in favor of “a woman’s right to choose.”

The falsehood of the 78-cent comparison could be seen at my own breakfast table.  For most of the 30 years that my wife and I have been married, I earned 78 cents for every dollar she earned.  That’s because she was a senior military officer and I have worked for Washington-based non-profits.  Again, we were exercising our freedom to choose. 

The only way there can ever be a complete parity of pay for all women in relation to all men is for women to reject the high calling of full-time mother and homemaker.  Granted, tens of millions of women are pursuing careers, many of them contributing greatly to the nation’s economic life.  No one wants to hinder them.  When women choose, however, to raise families full-time, that choice should be honored, supported, even applauded.  Such families deserve equitable treatment in our tax code.  There should not be government pressure-real or implied-to push them into the paid labor force.  And that’s just what canards like the 78-cent fallacy are designed to do.

Stimulost Update

by Family Research Council

February 10, 2009

The substitute “compromise” made cloture* tonight with a vote of 61-36. Beyond the Terrible Trio (Senators Collins (R-Me.), Snowe (R-Me.) and Arlen Specter (R-Penn.)) no Republicans voted for the measure. No Democrats voted against cloture. Senator Cornyn (R-Tex.) missed the vote, but one can safely assume he would have voted against it, and Senator Gregg abstained because he is going to be the next Commerce Secretary (I am assuming he is getting a head start on abstaining from all fiscal responsibility for the next four years.)

From the Senate: “Under the previous order, at 12:00pm tomorrow (Tuesday), the bill will be subject to another 60 vote hurdle by either waiving a budget point of order (if it is raised) or a 60 vote threshold on the amendment. If the amendment is agreed to, the Senate will then proceed to final passage of the Stimulus bill.

Majority Leader Reid also said this evening that additional votes on Executive Nominations may occur tomorrow.”

I’ve talked to several offices and between this and the David Ogden nomination Senate offices are getting swamped with phone calls - so keep them coming. It inspires those on our side and sends a strong message to those who are not.

The Congressional Budget Office (CBO) released a new estimate tonight on the “compromise.” CBO estimates that the package will cost $838.2 billion (not including interest which puts it over a trillion dollars). This is $18.7 billion more than the House-passed bill.

I also updated the greatest quotes (HERE) with the help of some FRC and Senate staffers.

*Cloture is the process by which debate can be limited in the Senate without unanimous consent. When invoked by roll call vote - three-fifths of those present and voting - it limits each senator to one hour of debate.

Senate Stimu-less? Don’t Buy It

by Family Research Council

February 7, 2009

Friend from the Hill sends the following:

On Saturday the Senate will be in session from 12:00 - 3:00 pm for members to speak and there will be no roll call votes. Also on Saturday cloture will be filed on the Collins/Nelson amendment and the cloture vote on the amendment will occur on Monday at 5:30 pm. If cloture is invoked on the amendment post cloture time will run until noon on Tuesday. At noon on Tuesday the bill will be subject to another 60 vote hurdle by either waiving a budget point of order or achieving 60 votes on final passage.

The Senate will not be in session on Sunday.

Why is Senator Harry Reid (D-Nev.) in the Senate taking so long in building bipartisan support to pass the bill instead of just passing it without Republican support like Speaker Nancy Pelosi (D-Calif.) and the Democrats in the House did? Well one, the Democrats in the Senate do not yet have 60 Members to defeat any filibuster from the Republicans and secondly, as the blog Hot Air points out, a new CBS poll shows “eighty-one percent of Americans say the stimulus bill should be a bipartisan effort. Just 13 percent think it is okay for a bill to be passed with only the backing of the Democratic majority.”

This new bill still has a good chance of passing, especially if liberal spending Republican Senators like Arlen Specter (R-Penn.), Susan Collins (R-Me.) and Olymia Snowe (R-Me.) vote for the bill. So please contact your Senators today. The phones have been lighting up so you might have to try a few times. Many of the problems we have documented (religious institutions, money to ACORN, etc.) remain in the new bill.

Some news reports are calling the new Senate legislation a streamlined bill. Mark Hemmingway over at the Corner has a list of a few of the cuts - however the bill is still full of pork and payoffs. Additionally the Senate Republican Policy Committee have sent around numbers disputing that this bill is more frugal:

Cost of deal: $780 billion

Cost of amendments added on the floor: $47 billion

Total cost of Senate bill: $827 billion

Total estimated cost with interest: $1.2 trillion

Senate bill is $7.5 billion higher than the House bill

Additionally, as Senate Minority Leader Mith McConnell (R-Ky.) points out “According to the figures I’ve been given, the House bill is about $820 billion. The Senate bill, under the compromise, we believe, would be about $827 billion. Bear in mind the interest costs on either of those proposals would be $348 billion. So we’re really talking about a $1.1 trillion pending measure.”

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