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Author: Gerardo Orlando (Page 48 of 169)

Fiscal reponsibility summit

February 23, 2009 /

I’m listening to Obama’s remarks as he closes his Fiscal Responsibility Summit, and it’s rather stunning to see an interactive session that includes the President, and other leaders of our government like John McCain and Steny Hoyer. It was particularly interesting to hear John McCain speak and be supportive of the Obama Administration’s goal to get control of the military procurement process.

When looking at the list of attendees, it seems clear that Obama is serious about his goal to address the serious fiscal issues facing this nation. We are wasting billions of dollars with an inefficient health care system and wasteful weapons programs.

There seems to be some consensus on the potential of cutting corporate tax rates in exchange for closing loopholes.

Coupled with Obama’s aggressive, and honest, budget proposal, this might help generate some serious momentum for fiscal discipline.

Economy, Health Care, Policy

Money for idiots – we have no choice

February 20, 2009 /

David Brooks laments the harsh reality that the bank, auto and mortgage bailouts are rewarding too many people for stupid behavior. Yet, if we want to stop the downward spiral, we have no choice.

It makes sense for the government to intervene to try to reduce the oscillation. It makes sense for government to try to restore some communal order. And the sad reality is that in these circumstances government has to spend money on precisely those sectors that have been swinging most wildly — housing, finance, etc. It has to help stabilize people who have been idiots.

Actually executing this is a near-impossible task. Looking at the auto, housing and banking bailouts, we’re getting a sense of how the propeller heads around Obama operate. They try to put together programs that are bold, but without the huge interventions in the market implied by, say, nationalization. They’re balancing so many cross-pressures, they often come up with technocratic Rube Goldberg schemes that alter incentives in lots of medium and small ways. Some economists argue that the plans are too ineffectual, others that they are too opaque (estimates for the mortgage plan range from $75 billion to $275 billion and up). Personally, I hate the idea of 10 guys sitting around in the White House trying to redesign huge swaths of the U.S. economy on legal pads.

But at least they seem to be driven by a spirit of moderation and restraint. They seem to be trying to keep as many market structures in place as possible so things can return to normal relatively smoothly.

And they seem to understand the big thing. The nation’s economy is not just the sum of its individuals. It is an interwoven context that we all share. To stabilize that communal landscape, sometimes you have to shower money upon those who have been foolish or self-indulgent. The greedy idiots may be greedy idiots, but they are our countrymen. And at some level, we’re all in this together. If their lives don’t stabilize, then our lives don’t stabilize.

There will be those who gripe about this and try to whip up anger and opposition to the administration’s efforts, but they won’t offer practical alternatives. They might call for the banks, automakers and homeowners to go bankrupt, but they probably don’t mean it. If they do, it probably means they have no clue of how bad it can get if they get their wish.

Economy, Policy

Employee Free Choice Act will go to Senate first

February 18, 2009 /

This makes sense. There’s no reason to force moderate Democrats to vote for the Employee Free Choice Act, otherwise known as Card Check, before the Senate tackles it. The real fight will be in the Senate.

Blue Dog Democrats in the House have asked House Dem leaders to postpone a vote on the Employee Free Choice Act until after the Senate votes on it, and the Democratic leadership has agreed, a senior House Dem aide tells me.

The discussions are likely to disappoint some in the labor movement, who see Employee Free Choice as their top priority and had hoped the House would act quickly and pass a strong bill before the Senate passes a weaker version. Proponents and foes of the measure alike say the Senate is expected to be the major battleground over the bill because of the tight Dem majority.

I think we might see a compromise here. Labor wants their bill, but it will be very difficult to get it through the Senate. That said, the current rules are stacked in favor of employers. There’s plenty of room to craft a compromise that makes it easier for unions to organize yet doesn’t go as far as this proposal.

Democrats, Economy, Policy

Too much stuff

February 17, 2009 /

Unsold stuff is piling up.

The unsold cars and trucks piling up at dealerships and assembly lines as consumers cut back and auto companies scramble for federal aid are just one sign of a major problem hurting the economy and only likely to get worse.

The only way to stop the downward spiral is to boost demand. That’s the point of the stimulus package.

The world is suddenly awash in almost everything: flat-panel televisions, bulldozers, Barbie dolls, strip malls, Burberry stores. Japan yesterday said its economy shrank at an 12.7 percent annual pace in the last three months of 2008 as global demand evaporated for Japanese cars and electronics. Business everywhere are scrambling to bring supply in line with demand.

Downsizing can be tricky, though. No one knows how much worse the economy will get, and while everyone waits for the recession to peter out, businesses are grappling with how to cut costs and survive without sabotaging their ability to grow when the economy picks up.

And there is a lot to cut.

“There is over-capacity in everything,” from “retail to manufacturing to housing,” said Richard Yamarone, chief economist at Argus Research. “If capacity is too large, you don’t need that many people employed, which is another reason we’re seeing such high job losses.”

As long as capacity far outstrips demand, businesses have little reason to expand, buy new equipment or hire workers. Even if the government funds bridge repairs and banks step up lending, many industries still have to go through massive restructuring before growth can resume. But executives say they have to tread carefully. If they put off critical investments in technology or research for too long, they could hobble their recovery and even the economy’s.

Economy, Policy

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