Bush Throws Out the First Pitch
Tonight, President Bush was booed as he arrived on the field at Nationals Park to thrown the opening pitch of the baseball season. It was the first game at the new stadium for the Washington Nationals.
As mentioned in the clip, Bush threw the opening pitch at Game Three of the 2001 World Series at Yankee Stadium. This four-minute clip looks back at the moment, and when contrasted with the video above, you get a feel for how far Bush's popularity has fallen in recent years.
New Backing for Obama
As Party Seeks Unity
WASHINGTON -- Slowly but steadily, a string of Democratic Party figures is taking Barack Obama's side in the presidential nominating race and raising the pressure on Hillary Clinton to give up.
Sen. Amy Klobuchar of Minnesota is expected to endorse Sen. Obama Monday, according to a Democrat familiar with her plans. Meanwhile, North Carolina's seven Democratic House members are poised to endorse Sen. Obama as a group -- just one has so far -- before that state's May 6 primary, several Democrats say.
Helping to drive the endorsements is a fear that the Obama-Clinton contest has grown toxic and threatens the Democratic Party's chances against Republican John McCain in the fall.
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Sen. Clinton rejects that view. Over the weekend, she reiterated her intent to stay in the race beyond the last contest in early June -- and all the way to the party's convention in Denver, if necessary.
"There are some folks saying we ought to stop these elections," she said Saturday in Indiana, which also has a May 6 primary. "I didn't think we believed that in America. I thought we of all people knew how important it was to give everyone a chance to have their voices heard and their votes counted."
Sen. Obama told reporters, "My attitude is that Sen. Clinton can run as long as she wants."
In earlier eras, the standoff between the two candidates might have been resolved by party elders acting behind the scenes. But no Democrat today has the power to knock heads and resolve the mess. Party Chairman Howard Dean says he was "dumbfounded" at the suggestion by Vermont Sen. Patrick Leahy Friday that Sen. Clinton should pull out.
"Having run for president myself, nobody tells you when to get in, and nobody tells you when to get out," Mr. Dean said. "That's about the most personal decision you can make after all the time and effort you put into it."
New York Sen. Clinton still hopes that by turning in strong performances in the final primaries, she can blunt the momentum of her rival from Illinois and make the case that she is best-positioned to take on Sen. McCain. With Mr. Dean, House Speaker Nancy Pelosi, former Vice President Al Gore and other party leaders remaining neutral, the question is whether the trend of party figures endorsing Sen. Obama will build enough momentum to tip the race.
The expected move by Minnesota's Sen. Klobuchar follows Friday's endorsement of Sen. Obama by Sen. Bob Casey of Pennsylvania, which holds its primary April 22.
Both senators had planned to remain neutral, according to party officials, but decided to weigh in as the Democrats' campaign became more negative and Sen. McCain was free to exploit the confusion looking to the November election.
One North Carolinian confirmed that at least several of the state's House members would go public in favor of Sen. Obama before long. Meanwhile, elected officials in other states with upcoming contests, including Indiana, Montana and Oregon, are weighing whether to endorse Sen. Obama.
What makes such endorsements significant is that they're from superdelegates. These delegates -- members of Congress, governors and other party officials -- can vote for whomever they want at the Democratic convention in August. Sen. Obama has a slight lead over Sen. Clinton in the pledged-delegate count -- the delegates won during primaries and caucuses -- but neither can amass enough pledged delegates for a majority. That makes the vote of the superdelegates decisive.
Since the "Super Tuesday" primaries on Feb. 5, Sen. Obama has won commitments from 64 superdelegates and Sen. Clinton has gotten nine. Sen. Obama has a total of 217 superdelegates in his camp while Sen. Clinton has 250, and her margin has been shrinking with each week. Sen. Clinton would have several more in her tally, but they're from Michigan, and delegates from Michigan and Florida won't be seated -- at least for now -- because both states defied party rules and held their primaries earlier than permitted.
"I think that says a lot about just where people are and what they're thinking," says former Senate Majority Leader Thomas Daschle, an Obama supporter. "And I think the numbers are just going to keep getting better" for Sen. Obama. Counting Sen. Klobuchar, Sen. Obama leads 13-11 among their Democratic colleagues in the Senate.
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MORE ON ELECTIONSEven raising the prospect of a convention fight could backfire for Sen. Clinton by antagonizing the superdelegates she needs. Many superdelegates are on the ballot themselves this year, and the last thing they want is a chaotic convention that plays into the hands of Republicans.
In interviews, some House Democrats said Sen. Obama has the edge in the chamber. They noted that he has proved himself the stronger fund-raiser and has attracted more new voters to the party than anyone in recent memory -- both advantages that could benefit other Democrats. They worry that Sen. Clinton's high negative ratings in polls would incite more Republicans to mobilize against her and the Democratic ticket.
Sen. Chris Dodd of Connecticut, a former presidential candidate and a past party chairman, told National Journal Friday that Sen. Obama's nomination is "a foregone conclusion" and "enough is enough." Sen. Dodd has endorsed Sen. Obama.
Mr. Dean, the party chairman, is urging uncommitted superdelegates to take sides no later than July 1, and effectively name the nominee. "If we go into the convention divided, it's pretty likely we'll come out of the convention divided," he said.
Democrats across the board, he said, "are haranguing me to show leadership." But they're often partisans for one candidate or the other, he added. Meanwhile, he said he is conferring with other party leaders, including Mrs. Pelosi, Senate Majority Leader Harry Reid of Nevada; former Vice President Al Gore; civil-rights veteran and Clinton confidante Vernon Jordan; former New York Gov. Mario Cuomo; and Jesse Jackson and his son, Chicago Rep. Jesse Jackson Jr.
"Most of their advice is, 'Let this play out, let's get through the primaries,' " Mr. Dean said. "And I think that's right....Voters have to have their say. It's painful, because that means we've got another two months of this."
Steps that can safeguard America’s economy
By Lawrence Summers
Neither US financial institutions nor the economy are likely to suffer from a lack of central bank liquidity provision. New lending facilities are coming along almost weekly, the safety net has been expanded to include non-bank primary dealers, the Fed has demonstrated a willingness to take on directly the most problematic parts of Bear Stearns’ balance sheet, and the Fed funds rate has been reduced by 200 basis points within 7 weeks.
At the same time, processes are in motion that may lead to new demands for more than $1,000bn in mortgages, directly or indirectly. Recent regulatory actions will enable Federal Home Loan Banks along with Fannie Mae and Freddie Mac (the government-sponsored enterprises) to purchase more than an additional $300bn in mortgage-backed securities.
There is substantial scope for further regulatory action as only a third of the punitive capital charge placed on Fannie and Freddie years ago has been lifted. Moreover, legislation to reduce foreclosures being pushed by Senator Christopher Dodd and Representative Barney Frank could result in the federal government purchasing or providing guarantees that enable the purchase of several hundred billion dollars worth of mortgages.
The confidence engendered by all of this has led to some normalisation in credit markets. Short-term Treasury note yields that had fallen to their lowest levels in a half century have risen to more normal levels as most credit spreads have narrowed considerably and market estimates of future volatility have declined.
It is sometimes darkest before the dawn. For the first time since last August, I believe it is not unreasonable to hope that in the US, at least, the financial crisis will remain in remission. The prices of many assets are discounting a severe recession or worse. Yet the combination of monetary and fiscal stimulus along with growing exports coming from a weaker dollar may limit the downturn, and newly induced demand for mortgages may support the mortgage market.
Just as cascading liquidations have contributed to a vicious cycle of both real and financial contraction, it is possible that recovery can be a virtuous circle in which improved financial and real economic performance are mutually reinforcing.
Wise policymakers hope for the best but plan for the worst. Liquidity provision and government efforts to support the mortgage markets can address problems of confidence. But they cannot ultimately prevent asset prices from declining to true values or make troubled financial institutions solvent.
While spreads have come in somewhat, markets continue to price in significant probabilities of default for even the most apparently strong financial institution, reflecting in part concerns about their solvency. At the same time it needs to be recognised that the federal government is bearing credit risk in extraordinary ways through its implicit guarantee to the GSEs, the lending activities of the Fed and the general backstop it is providing to the financial system.
All of this implies that a priority for financial policy has to be increases in the level of capital held by financial institutions. Capital infusions to date fall far short of prospective losses. Without new capital, the financial sector will operate with too much risk and leverage or will put the economy at risk by restricting the flow of credit.
On a favourable economic scenario, increases in capital will accelerate the return to normality in sectors such as municipal finance and student loans where credit has dried up, and will offset the moral hazard created by lending to financial institutions.
On an unfavourable scenario, increased capital will protect the taxpayers who bear the burden of government and Fed guarantees, will make possible more immediate and honest recognition of losses and will reduce the risk of vicious balance sheet contraction if asset values decline again.
The policy approach should start with the GSEs. These institutions’ viability with anything like their current operating model depends on the implicit federal guarantee of their several trillion dollars of liabilities. It is appropriate at a time of crisis in the mortgage markets that they become, as their regulator put it last week, the “lender of first, last and every resort”.
It is not appropriate that their shareholders’ “heads I win, tails you lose” bet with the taxpayer be expanded for this purpose. Given their past and prospective losses, their regulator – supported by the Treasury, the Fed and, if necessary, Congress – should insist that they stop paying dividends and raise capital promptly and substantially as they expand their lending. In the unlikely event that the boards of these institutions refused, policymakers should put them into an appropriate form of administration that insures that their obligations will be met.
Because they do not have a similar public mission and are operated with more financial rigour and closer regulation, the situation is somewhat different with respect to other financial institutions.
As part of its dialogue with financial institutions, the Fed should push for further efforts to raise capital. Consideration should be given to collective actions designed to destigmatise cutting dividends or raising equity. The idea of linking access to Fed credit and measures to attract capital should also be explored. At a time when much is being given to financial institution shareholders and management, action to help the economy and protect the taxpayer should be expected in return.
Regulation is the problem, not the answer
WASHINGTON (Map, News) - In an op-ed Friday in The Wall Street Journal, Sen. Charles Schumer, D-N.Y., blamed “the Bush administration’s hostility to regulation” for the subprime mortgage meltdown and other economic woes facing the nation. But Schumer’s implication that federal red tape has greatly diminished during the Bush years is patently false.
A study released last week by the Heritage Foundation tells the real story. The Bush administration imposed $11 billion in new regulatory costs last year alone, and another surge is in the pipeline for 2008. The study’s author, James Gattuso, told The Examiner that the notion that U.S. firms have been less regulated during the past eight years just doesn’t hold water. The last time a sustained deregulation occurred was back in the 1980s when Ronald Reagan was president.
Regulation’s “hidden tax” actually increased $30 billion since George W. Bush moved into the White House. Regulatory reductions resulted in savings of $684 million last year, but they were more than offset by new regulations that cost 17 times that amount, bumping up the total regulatory burden on American businesses to a staggering $1.1 trillion. Analysts at George Mason and Washington universities confirmed the Heritage analysis, reporting that appropriations for federal regulatory agencies increased 44 percent from 2001 to 2007, with a corresponding 41 percent increase in staff positions. So far from being “hostile” to regulation, the Bush administration enthusiastically embraced it.
The administration can and should be faulted for neglecting to exercise its considerable oversight powers over the financial industry before the subprime fallout hit crisis levels. But as the Heritage Foundation’s David John points out, banking regulators themselves got caught up in the same speculative housing bubble as everybody else, and were thus unable to spot the warning signs in time. The same thing happened during the tech bubble in the 1990s.
It’s hard to see how hiring even more bureaucrats will cure this collective blind spot.
When Democrats like Schumer talk about some mythical “lack of regulation,” they’re not just deliberately spreading falsehoods about their Republican rival. They’re also busy laying the political groundwork for the imposition of an even heavier regulatory burden that will cripple the economy. Such a scheme will be easier to impose if the American people are tricked into believing that the private sector is not regulated enough. But that simply isn’t true.
No Economic JFK
By INVESTOR'S BUSINESS DAILY
Fiscal Policy: In entertaining a near-doubling of the capital gains tax, Barack Obama shows that, unlike JFK, to whom he so often is compared, he under-appreciates the key link between investment and prosperity.
Interviewed by CNBC on Thursday, the Democratic presidential front-runner set his sights on boosting the top capital-gains tax rate from the current 15% set by President Bush to "20% or 25%."
"When I talk to people like Warren Buffett or others," he told Maria Bartiromo, "they say, 'Look, if it's within that range, then it's not going to distort . . . economic decision-making.'"
Obama did add that he would consider keeping the rate at 15% for middle-class taxpayers, contending incorrectly that the rich have benefited disproportionately from the Bush tax cuts.
"For us to roll back some of those tax cuts and to put this economy on a more stable fiscal footing, and to make investments in the American people so that they can afford a decent life . . . is actually good long term for our economy and also good for investors and Wall Street," he said.
Unfortunately, Obama's thinking has everything to do with pleasing the Democratic Party's anti-business base and nothing to do with economic reality.
Along with Ronald Reagan and George W. Bush, Jack Kennedy — one of Obama's heroes — ranks with the great tax-cutting presidents of American history. His 1963 proposal called for both a huge drop in the top individual income-tax rate and a significant reduction in the cap-gains rate — which then stood at the very same 25% level Obama now talks of increasing it to.
JFK knew a cap-gains rate even as high as 25% would lock up wealth that should flow to more productive investments. "The tax on capital gains directly affects investment decisions," he pointed out, as well as "the mobility and flow of risk capital . . . the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy."
Under both Reagan and George W. Bush, the connection between reducing cap-gains taxes to a low level and massive economic growth is undeniable — even for Barack Obama.
Indeed, the senator began his answer to Bartiromo's question on the subject by insisting that "we can't go back" to the "confiscatory rates that existed in the past that distorted sound economics." And he added that he "certainly would not go above what existed under Bill Clinton, which was the 28% . . . and my guess would be it would be significantly lower than that."
Yet clearly, Obama doesn't see the full picture. As Fed Chairman Ben Bernanke told Congress when he was chairman of the president's Council of Economic Advisers, the Bush capital-gains and dividend tax-rate cuts "provided incentives for businesses to expand their capital investments." And, as he added, "The effects are evident in the investment and employment data."
Tiny Hong Kong became a global economic powerhouse with its zero capital-gains tax, and the former communist nations of Eastern Europe have been tripping over themselves to bring tax rates on both income and cap gains down to rock-bottom levels.
Obama would take America in the opposite direction and, in so doing, put our global competitiveness at risk.
Tax Rebellion in Argentina
Violence broke out in Buenos Aires last week when demonstrators protesting food shortages and inflation were set upon by stick-wielding supporters of President Cristina Kirchner. The attackers were led by a sworn enemy of the private sector who was once an official in former President Nestor Kirchner's government.
"The only thing that motivates me," Luis D'elía said, after his assault on a protestor was caught on camera and his actions were justified by Mrs. Kirchner's chief of cabinet, "is hatred against the whorish oligarchs." He then announced that he and his men would patrol the city streets to defend their view that the country's producers are immoral. National police, who answer to the president, did nothing to quell the violence.
| Americas Columnist Mary Anastasia O'Grady comments on a political rebellion in Argentina. |
Argentina has been growing fast -- better than 8% a year -- since 2003. But this has largely been the result of the combination of a natural bounce after a collapse and a global boom in commodities. Meanwhile, simmering just beneath the surface of the recovery remains the fundamental contradiction that provoked the 2001 economic crisis. To wit, while a strong peso made Argentines prosperous in the 1990s, it was incompatible with the rigid, closed economy. The situation is the same today: Either the economy is opened, labor markets are made flexible and the business climate improves or the government clings to a weak peso policy as a way to compensate for an uncompetitive economic model and inflation comes back. Take your pick.
By choosing the latter, the Kirchners have won the support of that segment of the Argentine economy loyal to the principles of 20th-century fascist Juan Peron. These include labor militants, government bureaucrats, the Peronist political machine and the likes of Mr. D'elía, whose thugs act as Mrs. Kirchner's informal enforcers. But by generating inflation and provoking shortages Kirchneromics is also fueling widespread discontent.
The recent trouble began not in Buenos Aires but in the provinces, where agriculture is the main economic activity. Farmers rebelled earlier this month when the government announced an increase in export taxes on agricultural products. Claims that the government's new "retention" rates -- aka export taxes -- are close to an expropriation are not without merit.
Take, for example, soy beans. The new export tax will be raised to 44% from 35%. But since farmers also have to pay a 35% income tax on profits, the effective tax rate is significantly higher. "The farmer ends up paying essentially a 63% tax on gross income," says Pablo Guidotti, dean of the school of government at Argentina's DiTella University. If the price of soy goes up, Mr. Guidotti adds, the "retention rate" increases until the government can end up taking as much as 95% of any marginal increase in farmers' gross income.
In response to the tax increases, farmers have blocked roads in some 300 locations around the country, pledging not to allow their goods to reach markets. The effects of the action have been felt in the capital, where demonstrators have taken to the streets in sympathy for the farmers and against what they say is government arrogance. The strike is now in its third week.
Mrs. Kirchner says the tax increase is a redistribution mechanism, suggesting that growers and ranchers have to be forced to share more of their good fortune with others. But the greater motivation behind the export-tax increase is inflation.
This government, it seems, will do just about anything to reduce inflation except the one thing that would solve the problem: Let the peso strengthen. It has imposed price controls on businesses; frozen, and then subsidized, energy prices; and prohibited the export of beef. Last year it fired the director of the government's agency for inflation data because she refused to fudge the numbers. Even so, prices rose by an estimated 20% in 2007 and expectations for this year remain high. This would explain the new round of confiscatory export taxes. By discouraging farmers from sending food abroad, the government thinks it can increase food supplies inside the country and damp prices.
While making farmers furious and reducing the incentive to produce, this does nothing to address the causes of the inflation, which are monetary expansion and the failure of the economy to attract investment and expand productive capacity. A strong peso and a commitment from the government to respect private property are what's needed to confront rising prices.
Instead, like loyal minions desperate to plug holes in a leaky dike, Mrs. Kirchner's economics team is running around trying to compensate for the many Kirchner policy errors without freeing the economy. The inflation crisis is only the latest fiasco. Subsidies to offset the new export taxes cannot be far behind.
But never mind. Kirchner power does not lie in a rational economic model. The first couple's idea of running an economy is to tax, prohibit, regulate, subsidize and otherwise micromanage every aspect of Argentine life so that no decision can be made without checking first with them. They are, at bottom, unreconstructed authoritarians.
If you doubt this, consider the fact that Mr. Kirchner spent the past five years dismantling institutional checks and balances so that when this moment came, all the power would be in the presidential palace. He and his wife now control the judiciary, the legislature, the central bank, the national police and discretionary spending in the provinces. The only avenue left open to express dissent is civil disobedience.
As we saw last week, that path may be closing down too since the Kirchners now have their own military on the streets of Buenos Aires, led by Mr. D'elía. The anger and envy behind the rage of this mob is what kirchnerismo has sown since 2002. Those who dare to differ are likely to be met with more savagery.
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