August 31, 2009
Oh the irony of ironies. While News Corp is off calling Obama a socialist he is quietly pushing reforms Republicans have wanted for decades: Introducing competition to public schools via charters.
August 27, 2009
I was discussing yesterday just what will happen to the bottoming out of the housing market after all the tax credits, foreclosure mitigation programs, and rock-bottom mortgage rates end.
I argued the small rush of newcomers seduced by a bottom, and the improving economy (and therefore more relaxed lending) might be enough to hold sales and prices steady.
But then I found out about the administration’s plan to use 4.2 billion of stimulus funds to buy foreclosed homes and turn them into federal subsidized housing. By my quick calculation that’s about 40,000 houses at $100,000 each, which is about 6% of current inventory, a big enough share to support the market.
Seems like a perfect plan to me: Ensure sustained recovery, put foreclosed homes to use before they fall in disrepair, help people who did the worse through the crisis, and expand a helpful government program on the cheap.
August 12, 2009
The constant comparisons between the current healthcare push and the Clintons’ are superficial and misguided. It is actually much more like last year’s presidential campaign.
First off, the Clintons wrote the bill behind closed doors and then sent it to congress to rubberstamp. When it came time to sell it congress was MIA, so it was left to Hilary alone. A lady driving around in a bus. This time around there are 200+ salesmen with skin in the game, that know their respective constituents and what moves them. That means every day we are going to have dozens of advocates on local radio, network TV, morning shows, op-eds, etc.
On top of that you’ve got the best explainer in chief the White House has ever seen, a great communications machine, and an organizing arm.
Now think back to the presidential campaign: Early on McCain made outrageous accusations and fabrications about Obama. That gave him an initial bump, but strategically it was a huge mistake because it gave Obama months to disprove each and every one. Independents started seeing through the lies and distortions, and by election day nothing McCain could throw stuck.
Same thing is happening now. Lies, misrepresentations and innuendos are scaring the beejesus out of grandma, but after a couple weeks of further silliness, and disproving from proponents, this tactic will lose teeth.
In the end public support will be split very much as in the election: 100% of Fox viewers (i.e. Republicans) will hate it. Independents will lean in favor and Democrats will all support it (even though many will have to swallow hard). Only difference is that since the election Republicans have bled members.
Of course this isn’t a popular vote, so it remains to be seen what a 57/43 opinion split will do to move Blue Dogs and the Maine Twins.
July 27, 2009
No, not Obama, not Baucus, not Grassley. It’s Doug Elmendorf, CBO director.
Not once, or twice, but three times he has scored Congress proposals’ cost way higher than expected, which has resulted on damaging headlines. His rationale is that he is being conservative, and he will not credit any cost savings from changes and programs that aren’t proven.
Unfortunately there is little his predecessor Peter Orzag, now Obama’s OMB director, can do about it.
Krugman is crying foul, but a lot more pressure needs to be applied.
July 19, 2009
It’s been a quiet couple months in the domestic policy front, at least as far as people’s interest and perception. Everyone’s tired of elections and bailouts. MJ’s death, Iran’s crisis and Republican sex scandals took the spotlight.
But it’s about to get interesting as Obama comes off foreign travels, and goes on campaign mode for health reform.
And for those skeptic of reform passing, have they forgotten how the stimulus package was looking improvable, until he spent two weeks around the country pushing it to the front pages? He will be naming and shaming the obstructionists and steamrolling the Blue Dogs.
To which I say, about time!
July 2, 2009
The Treasury’s plan for selling back TARP warrants was announced last weekend, and it looks bad.
Simon Johnson gets pretty close to calling it corrupt, and he is right: Even if individuals have the best intentions, a poorly laid system will corrupt them. This is such a system.
If Obama goes through with it he will be making a big mistake: Giving Republicans amunition for the midterms and opening his administration to accusations of favoritism and backroom dealing, all while they could be getting a meaningful return and hoisting it as proof that the bank bailout was not all just a huge waste.
July 1, 2009
Republicans are hammering Obama because the unemployment rate is about to go over 10% (Gingrich says the stress tests “have already failed” because they were based on a lower number), and many Democrats in Congress are getting anxious about a tough reelection if the numbers don’t get better soon (and therefore are less willing to stick their necks out for the president).
But my money is on much better numbers turning out for August, maybe even coming back under 9%. Here’s why:
- Summer Jobs that typically are filled by high school students this year are going to be picked up by displaced workers, even though overqualified. Teenagers unable to find jobs will have less money for games, clothes and to save for the Fall, but nevertheless they will not be claiming unemployment benefits.
- Stimulus package: Construction projects will finally start coming online. Not the big rail and infrastructure projects to be sure, but definitely the smaller ones, such low-income housing weatherization and city roads. Also tax incentives for energy efficient windows and solar energy have kicked in, and these retail type contracts are ramping up as banks start lending again and contractors start marketing them aggressively. Then there is the undocumented worker factor: A sizable portion of construction work used to be done by illegal immigrants (20% ??), especially with small 5-10 person contractors. Many of these workers have gone back to their homelands, so for every 9 legal construction workers that were laid off, about 10 will now be hired back for a comparable project.
- College grads: More than usual they will go into volunteer work (unpaid or sponsored by the expanded Americorps), delay graduation, pursue graduate degrees, travel for a wile if they have the resources, or stay with their parents (without collect unemployment).
- Chinese stimulus: We’ll start feeling the effect of Chinese projects on our durable orders numbers.