Why oh why does this man irritate me so?  Now don't get me wrong, John Stossel is probably a nice man.  But for a man who can garner audiences, he is "dangerous" (well not really, but the guy's on TV and he is on the ra-ra free market Right's side promulgating this crap) with his half ass grasp on our economy.   Recently, on MyDD's evil twin, he wrote up a piece on how the economy really isn't doing bad.  That it was all media hype.

I'm sorry, this ain't no pissing contest, and even if it was, I don't got a dick, so it is irrelevant. I'm going to post this, and then I'm going to walk away. I'm sure Lakrosse made some wonderful points, that I probably agree with. I haven't read them yet, and may not, at all.

Right now, I want to talk about what the scholarship has to say about why Bill Clinton's economy was fundamentally strong (note: looking at my last diary, you might be asking -- wtf? Just because I can't trust the gov't statistics doesn't mean that there aren't statistics out there, and it doesn't mean that scholarly research can't be done with the CORRECT statistics).

So, what am I trying to say here? TEN YEARS AGO, the idea was that reducing the federal deficit would save the economy. That was conventional economic wisdom, you know by the eggheads, not just the cocktail parties.

That isn't what they're giving credit for, today. Today, the credit for Clinton's boom (which, it should be noted, is widely accepted to have been artificially extended by  the dotcom bubble, but was in fact a true boom) goes to infrastructure investments.

O-man has a lot of Chicago School economics people on his team. Let's just say that there's a reason he's not running on the balanced budget, and that reason is that the science doesn't show that balanced budgets save the economy. Come to think of it, none of the Democratic candidates were running on balanced budgets.

End of Rant. I go read rest of rec list now.

Tonight I attended a financial panel in lower Manhattan (SoHo) chaired by Sen. Dodd and sponsored by the Obama campaign.  The panelists included Robert Wolf (President, UBS), Mellody Hobson (President, Ariel Capital Management), Steve Mandel (Founder, Lone Pine Capital), and Eric Mindich (Founder, Eton Park Capital Management).  The topic of discussion was the current state of the U.S. economy and the need for a Democratic president to address the problems that it faces.  At the outset I must apologize if my summary is a little fuzzy on specifics - I do not work in the financial industry, to which the discussion was tailored, and so some of the policy specifics were outside of my comfort zone.

Sen. Dodd began by highlighting the commitment of those assembled to defeat the Republicans in November and expressed his deep admiration for the historic candidacy of Sen. Clinton, leading the room in a loud round of applause.  He then discussed recent meetings with foreign leaders in Ecuador and Brussels and their optimism that an Obama administration would restore competence to the Executive Branch.  He stated more than once that even though there might be troubles along the way (i.e., Obama's not perfect), this particular election, in his opinion, would be one that people told their children and grandchildren about and that would define U.S. policy for much of the current century.

At that point Sen. Dodd turned the microphone over to Mr. Wolf, who warmly praised Obama's economic policy.  Mr. Wolf focused first on Obama's stimulus plan, which among other things would address the current mortgage crisis (he noted that Obama is a strong supporter of Sen. Dodd's mortgage bill, which should come up for a vote in the Senate within the next week or so).  Mr. Wolf then discussed Obama's long-term policy, which was intended to increase the wealth of the middle class.  Mr. Wolf was not afraid to engage in a little "straight talk," and noted that it was absurd that Bush, McCain, and the Republicans pretend that the U.S. can conduct a war without having to pay the taxes for it.  Obama's plan would raise taxes for those making over $250,000 and ultimately peg the capital gains rate at about 20% (Mr. Wolf's personal prediction, not speaking for the campaign).  At the same time, the middle class and small business owners/entrepreneurs would receive a number of tax breaks.    

After Mr. Wolf finished speaking, the panel was opened for discussion.  Topics included the need to diminish the income gap between the middle and upper classes, the need for improved securities regulation, and tax reform.  Ms. Hobson made an excellent point that, even though some people in the room may have felt a little bit of a financial pinch, that was nothing compared to many people throughout the country who are currently living paycheck to paycheck.  She argued that the minimum wage needed to be transformed into a true living wage and expressed confidence that this would be possible under an Obama administration, having known Obama since he was a state senator.  

Sen. Dodd used the discussion of tax reform to make the broader argument that the Democratic Party needed to focus not only on the short-term benefits of various policies, but on how those policies affect voters' dreams and aspirations.  He related an anecdote about legislation he once supported (tax?) affecting beachfront homeowners.  Sen. Dodd assumed that his support of the legislation would antagonize those homeowners, but he later learned that the only people upset by his position were inland Connecticut citizens.  The reason for this, according to him, was that the beachfront homeowners knew that the legislation would not affect thir home ownership, but some inland citizens dreamed of owning beachfront homes and they perceived that he (inadvertently) had set an obstacle in their path.  Sen. Dodd's point was that the Democratic Party needed to once again become the party that promotes people's dreams, and that its policies should be cast in that light.  With regards specifically to tax policy, Sen. Dodd noted that the framing should not be so much about dry facts such as the amount of revenue generated but on how these policies can help grow personal wealth.

The discussion ended shortly thereafter and a reception followed.  Sen. Dodd again praised all of the assembled Democrats, stating that we are all a single family and that the divisiveness of this race was nothing compared to '68.  He lauded Sen. Clinton's candidacy and promised that she and Bill Clinton would play a large role in the Democratic victory in November and beyond.  I had hoped to speak briefly with Sen. Dodd about the issues of the day, but that was not possible - there were about 150 people crammed into the apartment where the reception was held and it was extremely loud.  Sen. Dodd left shortly after the reception began, and I left soon after he did.        

Say what you will about Sen. Dodd, but he is an incredibly effective advocate.  It is clear that he is just as excited about an Obama presidency as an official member of the campaign staff, and if a lifelong politician of his stature can be so energized, I have to believe that we're fighting the good fight, even if our standard bearer is not perfect.

Barack Obama's economic philosophy has been a mystery to me for most of this campaign. Most people on the liberal blogs assume he is anti-DLC because he is running against Hillary Clinton. But any serious look at his policy prescriptions show them to be similar to DLC proposals and to the right of John Edwards's and Hillary Clinton's progressive populism, as documented in numerous Paul Krugman columns. Obama himself has been pretty cagey and non-committal about his views on economics, sticking to Democratic boilerplate. An article published next month in the New York Review of Books, Economics: Which Way for Obama?, sheds some light on the intellectual underpinnings of an Obama economics.

The article describes Obama's advisers (such as Austan Goolsbee and Cass Sunstein) and plans as out of the University of Chicago, but not of Milton Friedman's "Chicago School". Sunstein describes their approach, in the book reviewed, as a Third Way libertarian paternalism:

Libertarian paternalism is a relatively weak, soft, and nonintrusive type of paternalism because choices are not blocked, fenced off, or significantly burdened. If people want to smoke cigarettes, to eat a lot of candy, to choose an unsuitable health care plan, or to fail to save for retirement, libertarian paternalists will not force them to do otherwise--or even make things hard for them. Still, the approach we recommend does count as paternalistic, because private and public choice architects are not merely trying to track or to implement people's anticipated choices. Rather, they are self-consciously attempting to move people in directions that will make their lives better. They nudge.

But to the degree that their approach is "libertarian", it is not progressive:

Once you concentrate on the reality that people often make poor choices, and that their actions can harm others as well as themselves, the obvious thing to do is restrict their set of choices and prohibit destructive behavior. Thaler and Sunstein, showing off their roots in the Chicago School, rule out this option a priori: "We libertarian paternalists do not favor bans," they state blankly. During a discussion of environmental regulations, they criticize the Clean Air Acts that banned some sources of air pollution and helped to make the air more breathable in many cities. "The air is much cleaner than it was in 1970," they concede, "Philosophically, however, such limitations look uncomfortably similar to Soviet-style five-year plans, in which bureaucrats in Washington announce that millions of people have to change their conduct in the next five years."

Here are a dozen, guaranteed, money back reasons why John McCain won't be the next president. (I can only offer a limited-time, money-back guarantee, since unfortunately I can't control world events.)

1. The McBush factor. McCain's support of the Iraq War will make it impossible for him to break from Bush, the most unpopular president in living memory. The photo of McCain hugging and being kissed by Bush will become increasingly embedded in the collective consciousness of the American people as the months roll on.

2. The Republican factor. Yes, McCain is a Republican. He will not be able to deny this fact. Currently, this is not the best party to have behind you in a push to the White House. Witness the recent loss of three traditionally Republican congressional seats and the declining number of Americans willing to identify themselves as Republicans. And then there are the comments of Congressman Tom Davis. "The political atmosphere facing House Republicans this November is the worst since Watergate and is far more toxic than it was in 2006" (NY Times, May 15th, 2008).

3. The Last War Syndrome. McCain and the operatives running his campaign are like generals fighting the last war. They are still convinced that negative advertising will be as successful against Obama as it was against Kerry. However, "The Times They are A-Changin." And this leads to the next factor.

4. The Change Factor: Hillary tried experience, but this race is about change and the future. McCain appears to be operating a time machine that has only a reverse gear.

5. The Money Factor: Obama can raise a lot more, and a lot more quickly.....enough said.

6. The Age Factor: McCain's age will hurt him. (I am not claiming that this is fair, but seems to be a fact. Older voters are especially concerned about McCain's age.)

7. The Not So Straight-talk Factor: McCain has built his reputation on being a man of principle. This has two features: he believes in something and he sticks with what he believes in. McCain has recently begun to backpedal on principles and commitments. He is vulnerable to being viewed as a flip-flopper, if not dishonest, which will undermine his hitherto greatest strength.

8. The Organizational Factor: The evidence thus far suggests that Obama has a far better campaign organization. There will be a volunteer gap, that is, Obama will have a lot more of them and they will be more enthusiastic than McCain's campaign workers.

9. The Skeleton Factor: The Keating Five and lobbyists, need I say more.

10. The Anger Problem: It's real.

11. The Crass and Crude Comment Problem: A corollary to the anger problem. He has made outrageous, crude, sometimes vile remarks, and most Americans don't know about them, yet. For examples, see http://www.dailykos.com/story/2008/4/8/1 7456/91972/887/492360

12. And last, but not least, The Lack of Background in Economics Factor. McCain has acknowledged that he needs to read up on economics. Not great for building confidence in a candidate in the midst of a recession.

Okay, that's twelve. But let's make it a baker's dozen.

13. The "My Friends" Factor. I don't believe that Americans will be prepared to live with four or eight years of being addressed by John McCain as, "My Friends," especially when it is followed by that rather strange little grin.

http://msa4.wordpress.com/

Hillary Clinton has joined John McCain in calling for a "gas tax holiday" this summer.  Their plans are basically to suspend the 18.4  cent per gallon tax on gasoline this summer in the hopes that it will reduce the price of gas and therefore help the average consumer.  

When I first heard McCain make this proposal I shook my head and smiled.  McCain has previously admitted that he doesn't understand economics very well and I thought his ridiculous gas tax proposal was more evidence that his self-assessment was correct.  I gleefully read article after article about how ridiculous this plan was.

I wrote this back on December 5, just when we were beginning to learn about how serious the mortgage meltdown was becoming. And now that this mortgage meltdown may take us down into a greater economic crisis, I think this is still a timely issue that needs to be discussed. And by the way, Hillary won't be able to help us get our of this crisis as our next President if we don't make sure that she wins. Please check out Hill's new MyPA page to not only help Hillary win Pennsylvania, but also tell the campaign how you'd like your money to be spent. Awesome, isn't it?

But anyways, on to the feature presentation... ;-)

Both Paul Krugman in today's New York Times and Clive Crook in this morning's Financial Times note the eerie silence coming out of the presidential campaigns on the current American economic crisis.

Krugman makes a compelling case that a President McCain would exacerbate the growing problems on Wall Street, surrounded as he is by economic snake-oil salesmen.

But, Crook really gives it to the Democratic candidates who continue to campaign on trade, when Americans are being hit not by NAFTA, but by an unregulated financial sector.

The separation of presidential politics from the troubles assailing the US economy is now verging on the surreal. With banks collapsing, the dollar reeling, the Federal Reserve making up new rules as it goes and observers discussing a new Great Depression, the presidential candidates are still on scripts they wrote a year ago. The main problem is either the North American Free Trade Agreement (Barack Obama and Hillary Clinton) or high taxes and excessive regulation (John McCain). If delivery from this ordeal depended on any of the contenders saying something intelligent about it, prudence would require that the entire country be written down to a nominal sum.

What makes this even odder is that the Democrats, at least, continue to hammer away at economic anxiety. The squeeze on "middle-class families" gives them an edge against the Republicans in November, they calculate. But they were saying this last year, and the year before - when unemployment was not rising, the economy looked pretty healthy and most Americans still did not know the difference between an SIV and a CDO. The themes are trade and jobs, shuttered factories, stagnant incomes, unlevel playing fields and labour and environmental standards. As for the complete breakdown of the credit system and the danger of a years-long Japanese-style slump - oh, yes, there's that as well.

Part of this is surely due to the fact that noone's got anything intelligent to say on the matter, Democrat or Republican. After all, with an interest rate just above 2% and the Fed bailing out unregulated investment banks, clearly nobody has a good idea about what's going on or what to do about it.

It also speaks volumes to the stranglehold finance has on American politics. No presidential candidate can call for the type of banking regulation that seems necessary in the current financial climate (and, I might add, seemed obviously necessary to many of us in the lead up the crisis).  

One need only look to the right of Clive Crook's column today to find a ready rejoinder to the argument for updating banking regulation. And one cannot blame Ms. Robinson of that eminent publication, The Banker for defending the rights of her patrons to unregulated financial industry, backed by the safety net of taxpayer bail outs. But for the rest of us, the case is clear.

No presidential campaign will touch the current economic crisis. It's toxic, and there are no obvious solutions. But that silence speaks more about the root of our economic distress than anything else.