Today Politico Arena asks:
Do you feel safer from terrorism today than you did the day before? Assess Obama’s response.
My response:
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Today Politico Arena asks:
Do you feel safer from terrorism today than you did the day before? Assess Obama’s response.
My response:
Washington is fretting this week over news that mortgage applications fell dramatically in November. Coupled with earlier indications of renewed softening in the housing market, there is growing fear that housing is headed for a “double-dip downturn” that could further damage the economy. As a result, Federal Reserve policymakers are considering additional stimulus, while the National Association of Realtors is suggesting an(other) extension of the “temporary” homebuyer tax credit.
Remarkably, neither policymakers nor the media are asking the obvious question: Given all of the emergency interventions in housing that government has undertaken, and the fact that the housing market continues to erode, do such interventions do much good?
Since the bursting of the bubble in 2006, the great unknown has been whether housing prices will revert to their historical trend (and possibly to below trend for a short period), or stabilize at some permanently higher level because a portion of the bubble (aided perhaps by public policy) would prove enduring. There is good reason to expect reversion to trend, but the economy can surprise us.
Let’s use an example to understand this better. The graph below depicts the course of house prices for my hometown of Hagerstown, MD, an area within commuting range of suburban DC that was hit particularly hard by the bubble and its deflation. The black line is a house price index computed by the Federal Housing Finance Agency for 1989–2009. The red line is an extended linear trendline drawn using index data from the period 1989–2002. (You can do the same analysis for your area using these FHFA data.) The question, then, is whether house prices will fall all the way back to the trendline or will stabilize at a level above the trendline.
The sharp downward slope at the end of the price line and the latest housing news suggest that Hagerstown is destined to revert to trend (perhaps after a period below trend). I’ve drawn similar figures for several other locations and they show similar patterns. It looks like the nation’s housing markets, for the most part, are reverting to trend.
When this crisis first began in 2007, Bush administration officials vowed to “stabilize house prices at the highest possible level.” However, despite their efforts and those of the Obama administration, Congress, and the Fed, reversion to trend appears inevitable. At best, those efforts may have slowed the reversion — in which case, I suppose the Bush goal has been met.
It can be argued that a gentler reversion to trend may be more tolerable than a sharp return. On the other hand, there are fears that a lengthy softening of the housing market will lead to more defaults, less worker mobility, continued weak consumption, and a long period of high unemployment and stagnant wages for those who are working. Perhaps a sharp return would be the quickest way to shed the ill effects of the bubble.
This leaves us with a final question that policymakers, the media, and the public should be grappling with: If all of these emergency housing interventions only result in a slower reversion to trend, then is that benefit worth the cost?
Even though I’ve been in Washington for almost 25 years, I still get shocked by the deceit and double-talk that characterizes this town. A perfect example can be found in today’s Wall Street Journal, which features a column by Karl Rove attacking President Obama for fiscal incontinence. I’m a big fan of condemning Obama’s big-government schemes, but Rove is the last person in the world who should be complaining about too much wasteful spending. After all, he was the top adviser to President Bush and the federal budget exploded during Bush’s eight years, climbing from $1.8 trillion to more than $3.5 trillion. More specifically, Rove was a leading proponent of the proposals that dramatically expanded the size and scope of the federal government, including the no-bureaucrat-left-behind education bill, the two corrupt farm bills, the two pork-filled transportation bills, and the grossly irresponsible new Medicare entitlement program.
Not surprisingly, Rove even tries to blame Obama for some of Bush’s overspending, writing that “…discretionary domestic spending now stands at $536 billion, up nearly 24% from President George W. Bush’s last full year budget in fiscal 2008 of $433.6 billion. That’s a huge spending surge, even for a profligate liberal like Mr. Obama.” This passage leads the reader to assume that Obama should be blamed for what happened in fiscal years 2009 and 2010, but as I’ve already explained, the 2009 fiscal year started about four months before Obama took office and 96 percent of the spending can be attributed to Bush’s fiscal profligacy. Yes, Obama is now making a bad situation worse by further increasing spending, but he should be criticized for continuing Bush’s mistakes.
Rove then has the gall to complain that Obama is “…growing the federal government’s share of GDP from its historic post-World War II average of roughly 20% to the target Mr. Obama laid out in his budget blueprint last February of 24%.” Yet a quick look at the budget data shows that the burden of federal spending jumped from 18.4 percent of GDP when Bush took office to more than 25 percent of economic output when he left office. Even if the (hopefully) temporary bailout costs are not counted, Bush and Rove are the ones who deserve most of the blame for today’s much larger burden of government. It should be noted, by the way, that none of the new spending under Bush was imposed over his objection. He did not veto any legislation because of excessive spending.
Finally, Rove concludes by writing that, “After a year of living in his fiscal fantasy world, Americans realize they have a record deficit-setting, budget-busting spender on their hands.” I’m almost at a loss for words after reading this sentence. All during the Bush years, I would complain to people in the Administration about wasteful spending. It didn’t matter whether I was talking to people at the Office of Management and Budget, the Council of Economic Advisers, the Treasury Department, or the National Economic Council. They almost always expressed sympathy for what I was saying, and then complained that the decisions were being made by the “White House political people.”
There’s an old joke about chutzpah and it features a guy who murders his parents and then asks the court for mercy because he’s an orphan. Karl Rove has taken the joke to the next level, but there’s nothing funny about the consequences for America.
A thing I really like about Sunlight Before Signing is that it’s a clear promise President Obama made on the campaign trail.
An equally clear promise, highlighted by Michael Cannon earlier this week, was to broadcast negotiations about health care reform on C‑SPAN.
C‑SPAN is ready. As reported by the RealClearPolitics blog on Time.com, C‑SPAN public service icon Brian Lamb wrote a letter to House and Senate leadership offering to cover health care negotiations:
President Obama, Senate and House leaders, many of your rank-and-file members, and the nation’s editorial pages have all talked about the value of transparent discussions on reforming the nation’s health care system. Now that the process moves to the critical stage of reconciliation between Chambers, we respectfully request that you allow the public full access, through television, to legislation that will affect the lives of every single American.
Many others could be, but Brian Lamb isn’t pulling a partisan stunt or trying to affect the health care debate one way or another. He’s trying to fulfill the promise of open democracy that had audiences roaring when President Obama extolled these virtues on the campaign trail:
“[W]hen I’m president, meetings where laws are written will be more open to the public. No more secrecy. That’s a commitment I make to you as president. No more secrecy.”
I’ve covered President Obama’s “Sunlight Before Signing” campaign promise here many times before. And, as predicted when I last reported, Obama has turned the corner and begun giving bills some sunlight.
In December, five bills were posted on Whitehouse.gov for five days before the president signed them. (Technically, they were only linked to from Whitehouse.gov, but the link allowed citizens to find the text of bills awaiting his signature—the substance of the promise.)
Those five join the DTV Delay Act, Public Law 111–4, to make six out of 124. That’s a .048 batting average on Sunlight Before Signing, a huge rise from the .009 average he had after signing P.L. 111–118.
After the jump, you can see the latest SBS chart. I expect that President Obama’s average will continue to rise as more bills see the public airing he promised when he campaigned for the presidency.
* Page now gone, but it was either directly observed, evidence of it appears in Whitehouse.gov search, or White House says it existed.
† Bill was posted for five days after final passage, though not formal presentment. Counted as “Yes.”
‡ Link to final version of bill on impossible-to-find page.
When lawyers and other commentators say that a court did not properly explain its decision, it’s typically for hyperbolic effect. But, in a bizarre move, a court in the failed great state of Michigan has dismissed an economic liberty case brought by our friends at the Mackinac Center Legal Foundation for reasons the court quite literally did not explain. The court simply denied the plaintiffs’ complaint and that was that.
Home-based day care owners Sherry Loar, Michelle Berry, and Paulette Silverson have all been taxed by the Michigan Department of Human Services because, according to the state, they are somehow employees of the state and (further!) must pay union dues. because this baseless assertion comes directly from the state DHS, an executive department, among the significant constitutional objections to the case presents separation of power problems. (Ok, I haven’t studied the Michigan Constitution, but I assume they separate their powers there.) Enough ridiculous laws are passed by state legislatures — more than 40,000 last year alone — we don’t need state executive agencies getting into the act.
Yet, the Michigan Court of Appeals has nothing at all to say about the case.
Inexplicable — and unpardonable.
The Wall Street Journal has an article today for people who think that we need government to thrust itself into the economy because major projects, like energy and technology projects, are too big or risky for private businesses. The article focuses on Chevron’s offshore oil development:
Chevron is leasing the Clear Leader, which floats in 4,300 feet of water in the Gulf of Mexico, to drill for oil through nearly five miles of rock. Big Oil never wanted to be here, in 4,300 feet of water far out in the Gulf of Mexico, drilling through nearly five miles of rock…
It is an expensive way to look for oil. Chevron Corp. is paying nearly $500,000 a day to the owner of the Clear Leader, one of the world’s newest and most powerful drilling rigs. The new well off the coast of Louisiana will connect to a huge platform floating nearby, which cost Chevron $650 million to build. The first phase of this oil-exploration project took more than 10 years and cost $2.7 billion — with no guarantee it would pay off.…
“This is technology capable of going to the moon,” says Robin West, chairman of consulting firm PFC Energy, involving “extraordinary uncertainty, immense levels of information processing, staggering amounts of capital.” …
“What has enabled us to do that is technology,” says David Rainey, BP’s head of exploration for the Gulf of Mexico. “We have been pushing the limits of seismic-imaging technology and drilling technology.”…
The push into deeper water hasn’t always been smooth sailing. Offshore projects are expensive, time-consuming and prone to failure. Chevron boasts of a 45% exploration overall success rate in recent years, a remarkable run by industry standards, but one that also means the company has spent billions on projects that haven’t panned out.”
Bravo for gutsy and aggressive American capitalism! Chevron is taking huge investment risks, making remarkable technological advances, creating jobs, and finding new energy supplies to keep our homes bright and warm.
Political leaders in Washington should be encouraging such private business activities to pull the nation out of its slump. So rather than trying to hike taxes on multinational corporations and oil companies — as the Obama administration proposed in its budget last year — policymakers ought to be cutting corporate tax rates and making other pro-investment changes in federal tax and regulatory policies.