I usually watch NBC's Meet the Press not because I'm impressed with Dave Gregory (Chris Wallace of Fox News Sunday is best interviewer in news today) or the liberal-slanted panel, but because it makes news.
Regular watchers of FNC's Red Eye with Greg Gutfeld, a conservative comedic take on the news and the best thing on Fox News Channel (which airs at 3AM, hence the name), are well aware of the fact that ombudsman Andy Levy's halftime report has been sponsored, tongue-in-check, by "David Gregory's hair", as referenced in the clip below. [I now have a Pavlovian response of giggling every time I see Dave Gregory on television.]
There were a couple of interesting guests on the show this morning, former long-time Federal Reserve chairman Alan Greenspan and New York Mayor Mike Bloomberg. I think libertarian Greenspan has gained a certain amount of favor from progressives by publicly suggesting that his faith in the free market had been shaken by the failure of AIG, Lehman Brothers, and other market participants to enact necessary risk control mechanisms on their own, precisely to ward off (predictably incompetent) government regulation/meddling. With all due respect, I believe Dr. Greenspan is wrong; whereas he in late 1996 had famously worried about irrational exuberance in the equity market, how was it that he did not foresee the inevitable bursting of a different asset bubble during the 2000's, namely the real estate market? Blaming the private sector is convenient when the Fed, along with other governmental entities (state regulators, the SEC, etc.), also failed to detect alleged systemic economic risk.
Did it take a PhD in economics to know when Florida condo ownerships were flipping 3 or 4 times before ownership, there was too much money sloshing around in the economy? When financial institutions were devising synthetic products because there weren't enough "real" mortgage notes to satisfy investor demand? When to prop up a peaking housing market bankers had to devise new types of mortgages and accept riskier market participants with minimal collateral and without traditional validation of credit risk (e.g., work history)?
The reader at this point might interject and say, then, why did AIG happen? You might as well argue about crazy valuations of unprofitable Internet firms before the Nasdaq correction or how Enron happened... Of course, back then you heard talk about gaining market share first (or, at best, you would be a minor niche player), profits will follow; a new type of economy where traditional market rules and valuations are irrelevant; etc. Similarly, Enron was able to convince others large-cap companies were able to earn gravity-defying returns on an ongoing basis. There were skeptics, of course, to all these stories, but timing the market is easier said than done.
I personally think that the issue really was more about competence, both at the managerial and regulatory level, in assessing and controlling for risk. Businesses fail for multiple reasons. A very clear example of that occurred in the auto industry where Ford, unlike GM and Chrysler, did not go through a bankruptcy.
But the topic of interest to me was the inane discussion over the expiring Bush tax cuts, particularly for the upper-income. You got the predictable progressive response that Clinton raising the top marginal tax rate to 39.6% "disproved" the supply-side argument that raising progressive tax rates would adversely affect federal revenue. I strongly disagree; the issue is not whether there would be a functional economy with a higher income tax rate--after all, there was still an economy with FDR's 90% income tax rate until John Kennedy reduced tax rates; Clinton's top rate was still below what Ronald Reagan inherited. Companies still invested and operated across market conditions and federal tax policies. What progressives don't seem to understand is that rates have an effect at the margins. For example, I had a situation over the past year where I had agreed to a low subcontract rate and then the agency tried to shake me down, saying the client wouldn't agree to the original rate (net of the agency's fee). I decided to walk away from the deal.
Federal revenues rose during the period, but most of us conservatives believe that federal revenues, which correlate with economic growth, would have been higher at the original (Bush) rate. Although I haven't calculated the opportunity costs of the higher tax rate, it should be noted around the time of the Clinton tax hike, federal revenues fell short of predicted values, and CBO estimates at the time were predicting ongoing deficits.
The other point specifically raised to Greenspan dealt with supplier-side economics, i.e., the belief that a reduction in marginal tax rates will pay for themselves through ensuing higher economic growth. For example, if I get more per hour (because taxes are lower), I may work more hours. At one point, Greenspan conceded that the cuts won't pay for themselves. Certainly in one manner of speaking that is true: if you do not have income taxes at all, you won't have income tax revenue. You have to have some optimal tax rate; this is a topic which Laffer and others have discussed. And there's Hauser's Law, an empirical advantage that says that federal revenue over the last few decades has averaged about 19.5%, across marginal rates. This does not mean changes in marginal rates are unimportant; JFK's motivation for reducing tax rates was to stimulate economic growth and hence growth in tax revenues.
The other guest of interest was Michael Bloomberg, the prominent financial news and media entrepreneur and current third-term mayor of New York City. A former Democrat who switched parties to succeed Rudy Giuliani, Bloomberg switched his affiliation in 2007 to independent, with public policy positions (e.g., gun control and climate change) at odds with the GOP right-wing and a firm belief he could be more effective seen as a nonpartisan broker between parties. [Many people at the time were speculating that he made the move as a possible first step towards the 2008 Presidential rate.]
There has been some speculation that Bloomberg is looking at a possible run as an independent in 2012, which he flatly rejects as out of the mainstream: "I'm pro-choice. I'm pro-gay rights. I'm pro-immigration, I'm pro-gun control. I believe in Darwin." I think this analysis is based primarily on Giuliani's short-lived campaign which gambled on a Florida victory to propel him into Super Tuesday. (Giuliani has had similar stands on issues.) Does anyone doubt in the aftermath of the economic tsunami, Bloomberg, as an experienced public sector administrator and a legitimate non-partisan with much more knowledge of economics than either McCain or Obama, would have been a powerful force?
I do not doubt Bloomberg would have problems in the 2012 GOP race, because his climate change and immigration positions would immediately attract the opposition of media conservatives. But let's not forget that media conservatives did everything in their power to keep McCain from the nomination in 2008 because of his Bush tax votes and immigration. I think a lot will be decided in this fall's elections. The Tea Party activists have essentially given the GOP Senate nods in purple states Nevada and Florida to weak candidates. We now see the possibility of Majority Leader Harry Reid gaining reelection over Sharron Angle in what would be a walk with either of her two losing primary opponents. Charlie Crist (I-FL) continues to beat Rubio in most polls after Rubio surged into the lead for the GOP nod early this year over the popular incumbent governor.
Romney remains my current favorite based on his business and gubernatorial experience. Mitch Daniels' brilliant Indiana state administration has also caught my eye. Bobby Jindal's strong leadership during the Gulf oil crisis merits strong consideration. I think Mike Huckabee has an admirable personal style and his tax simplification message would be powerful.
But if we saw, say, a Sarah Palin nominated, I would not be surprised to see a schism in both the Democratic and GOP parties. We are seeing strings of senators of both parties (e.g., Bayh, Specter, Nelson (D-NE), Lieberman, Graham, Collins, Brown (R-MA), and Snowe) expressing concerns about the hyper-partisan situation in Washington.
As for me, whereas I disagree with Bloomberg's pro-choice position and have concerns about the climate change groupthink, what I'm more concerned about is the economy and fiscal conservatism, streamlined government operations and resolution of the entitlement solvency problems.
Another Pet Peeve: The "Obstructionist" GOP, the "Party of No"
One of the most outrageous claims of progressive political spin is the fact that the Democrats, despite passing some 200 bills, want to call the GOP to task because of the "unprecedented" use of the filibuster in the Senate. You have had a majority party routinely defeating substantive GOP amendments on party-line votes and then essentially ramming through so-called health care and financial reform measures, with less than a handful of GOP votes from both chambers combined; the majority also passed a $787B stimulus bill playing only lip service to transparency. (Transparency of 2000-page bills? Give me a break...)
I think the GOP leadership has been wise in not getting suckered into revealing, for instance, what austerity measures it would favor. I'm sure that Prime Minister David Cameron of the UK would have faced stiff resistance (if not protests) if he had promised real cuts in social welfare spending. What the Democrats are hoping to do is trying to lure Republicans into the open with spending cuts and then run against the spending cuts in the fall campaign. Republicans should simply say that the American people need to give them the mandate they need to force the President to negotiate in good faith and not call bills with less than 10% GOP support "bipartisan". Bipartisanship consists of more than Obama showing up at a partisan retreat for a couple of hours or a single day hearing on health care; public relation stunts are NOT legitimate bipartisan activities.
Political Cartoon
Steve Kelley manages to encapsulate in a single cartoon the condescending hypocrisy of progressivism.
Quote of the Day
Do not speak of your happiness to one less fortunate than yourself.
Plutarch
Musical Interlude: The American Songbook Series
Johnny Mercer, "On the Atchison, Topeka, and the Santa Fe"
