The New Republic

Maybe the idea is that if every economist is in a room yelling at each other, then Obama can do whatever he wants and say he's following his advisers.

- mkayser0

November 26, 2008 at 1:51pm

"But governing is a lot different than campaigning."

Of all the issues I have with this blurb, I have to point to this tidbit as the most bothersome. Foremost, it is less-than-insightful: governing is governing and campaigning is campaignging. And the last time I checked, these two activities were NOT mutually exclusive. Of course, I think Obama governed his campaign very well; he set the goals and strategies, and his staff figured out how to make it work. Despite the apparently worrisome volume of appointees focused on the economy, I fail to see where anything is deviating from the previous pattern.

- GSpinks

November 26, 2008 at 2:10pm

I'm going to post Micheal Hudson's concerns; I agree with all of them. (Going to treat myself to his "Super Imperialism" book this Xmas, I can add it to my impressive collection of anti-American screeds.):

"his (Obama's) recent economic and foreign policy appointments make it clear that when he chose “change” as his campaign slogan, he was NOT referring to the financial, insurance and real estate (FIRE) sectors, nor to foreign policy. These are where the vested interests concentrate their wealth and power. And change already has been accelerating here. Unfortunately, its direction has been for the top 1% of America’s population to raise their share of in the returns to wealth from 37% ten years ago to 57% five years ago and an estimated nearly 70% today...

...The change that Mr. Obama is talking about is largely marginal to this wealth, not touching its economic substance – or its direction. No doubt he will bring about a welcome change in race relations, environmental regulations, and a more civil rule of law. And he probably will give wage earners an income-tax break (thereby enabling them to keep on paying their bank debts, incidentally). As for the rich, they prefer not to earn income in the first place. Taxes need to be paid on income, so they take their returns in the form of capital gains....

...Obama’s ties with the Yeltsin administration are as direct as could be. He has appointed as his economic advisors the same anti-labor, pro-financial team that brought the kleptocrats to power in Russia in the mid-1990s. His advisor Robert Rubin has managed to put his protégés in key Obama administration posts: Larry Sommers, who as head of the World Bank forced privatization at give-away prices to kleptocrats; Gaithner of the New York Fed; and a monetarist economist from Berkeley, as right-wing a university as Chicago...

...This year has changed the typical fate of financial wealth in the face of bursting financial bubbles. Traditionally, business booms culminate in a wave of bankruptcies that wipe out bad debts – and the savings that have been invested on the “asset” side of the balance sheet. This year has changed all that. The bad debts are being kept on the books – but transferred from the banks to the federal government, mainly the Federal Reserve and Treasury. The bank bailouts have aimed not so much to protect the banks themselves, but to enable them to pay off on the bad bets they made vis-à-vis the nation’s hedge funds and other institutional investors in the derivatives market...

...Bloomberg has added up these programs and finds that they $7.7 trillion dollars – nearly half an entire year’s GDP. By acting to support the market for bad-mortgage loans (but not for real estate itself), the seemingly endless series of Paulson bailouts seeks to be to keep today’s debt overhead intact rather than writing it down. Service charges on this indebtedness will divert peoples’ income from consumption to paying creditors. It will help financial investors, not labor or industry. It will keep the cost of living and doing business high, preventing the U.S. economy from working its way out of debt by becoming competitive once again....

And he goes on to list some great suggestions for real change: reintroduce the estate tax; tax capital gains at the same rate as labour; tax corporate borrowing; only allow real estate depreciate once; close off shore tax avoidance and others.

Great stuff.

- The Ignorant Populist

November 26, 2008 at 3:05pm

Iggy, if what you say does come to pass, then expect Dems like me to abandon Obama in 2012.  He wil deserve being 1 term president, and unlike the R's, we will not quietly fall in line.  We expected change and what you're listing ain't it.  I'm infuriated that at a minimum Obama won't even pay lip service to chiding Cit/AIG execs for their personal excesses while getting hundreds of billions in welfare, er, assistance.  I've already seen some grumblings like this on MSNBC and it will get louder.

And the prescriptions you list at the end of your post: aren't several of them directly from the tax reform bill passed during Reagan's 2nd term?

- tnmats

November 26, 2008 at 3:36pm

Oh alright already Mr Smarty Pants Europe to his dunce, duped American cousins - having a highly intelligent, pragmatic man who hires experts, values debate and reason - who actually listens to Americans and the world is a radical a change as we've probably ever gone through in a Presidential cycle.  The petty nature of this change gotcha is getting tired.

Remember: unbelievably corrupt religio-morons (my favorite was the televangalist who was outed by his meth dealer/male prostitue)? Denial of global warming? Calling Rush Limbaugh a great American? Alberto Gonzales? Not allowed to say "insurgency?" Iraq in general - etc?  Please.  Enough already.

I do think having a whip smart opposition- or even just call it a skeptic -  is the key to success for Obama and I look to you for that Iggy.  But the shtick needs another angle to have the correct punch.

- Wandreycer1

November 26, 2008 at 3:39pm

PS Iggy not that some of your ideas (especially the estate tax and taxing of capital gains. I'd also vote for the re-instatement of Glass-Seagal ASAP) aren't terrifics as always.  They are.  The point is taken.  But the "oh snap, this isn't chage we can believe in" frame is getting as tired as the Team of Rivals.  

Yes, I'd absolutely like Obama to actually scold those ridiculous out of touch rat bastards from the car companies and Citi, absolutely.  I never claimed to be Gandi myself, I"m clearly not. But I trust Obama's judgement so far, I'd like to let the man get in office before I start kvetching from the left (which I will) until everyone wants to vomit like we ALWAYS do.

- Wandreycer1

November 26, 2008 at 3:50pm

Point taken Jill, the change is not real change canard is a bit tiresome, I agree.

I think the Left have real concerns over Obama's personal picks.

It's Neo-Liberalism Part Deux, the same crew that brought you exploding GDP with stagnating median wages; the same crew that sees the international free flow of capital as the Zeus of all economic theories, even when it destroys economies (South East Asia for example) and erodes local democracy; the same crew that believes in shock treatment for emerging economies that actually equates to destroying local industry and opens up passive markets for agri-businesss and other US industries; the same crew that believes in forcing economies to decimate their public spending and "open" up their markets to "free" trade.

And Volckers got a lot to answer for; his actions ensured Bono gets to fly around the world on his third world debt, plea for humanity tour.

So, yea, not great picks. I'm for Obama; we should once and for all agree that he is a huge improvement on the last eight years and will probably be a huge improvement on Clinton's time - if and only if, Summers et al have learned from their experience, there are some signs that they have. (Summers call for shoring up organized labour for example) I'm not going to stick the leftie stake in Obama, yet but neither should we be so overcome with relief that we prostrate ourselves at the bi-partinship, centrist, neo-liberal TNR altar either.

Mat - I'm not sure what you mean about Regean tax bill. Can you educate my ignorant ass?

- The Ignorant Populist

November 26, 2008 at 4:02pm

Ok, better - I can't disagree with anything you say, although I lean left on different things than you do (maybe I'm still in a defensive crouch? Maybe I can't get passed the PTSD of it all?).  I'm rigid left on social policy, separation of bullying morons and state, etc, hands off my body, leave gay people alone stuff.

But the things you are saying aren't so much left and right as straight up right and wrong - one of the biggest problems of the last ten years has been a lack of accountability for egregious behavior that is nothing less than a pox and a danger to the Republic.  

Pardon my french, but not one fucking head has rolled anywhere at all - not one.  Excuse me, but did we just give a blank check to Citi and the chuckleheads in charge aren't even required to give back bonuses, let alone get their asses fired like any of us would?  My husband works on Wall Street -- for a French bank thank God, they don't have sub-prime mortages in France.  Anyway, everyone he works with or knows on the Street up and down the ladder is really pissed about that.  Regular Joes, and yes they do exist in large numbers, are tired of being punching bags and want their reputations back. They are disgusted morally too - really disgusted.  Very few of the people on Wall Street remotely resemble the stereotype floating out there. It's like thinking everyone in Hollywood is Britney.

Also, remember - markets are entirely emotional and they want to see old hands, for better or worse.

Anyway, Obama will lose touch with his masses quickly if he doesn't jump on this need in people.  If he doesn't, you can bet Palin will.  We'd best get in front of this accountability issue NOW - I know the economic team is mostly great, but not one bomb thrower in the lot and labor has so far been hosed.  

Talk about tone deaf.  Get on it Mr President-elect, get on it now. Send a hardass if you must, but get someone big fired soon - on live TV, dragged out in handcuffs preferably.  Look away if it pains you, it won't pain the rest of us one bit.  We need it.

- Wandreycer1

November 26, 2008 at 4:46pm

Totally agree Wandrey and it's not about personalities, it's about policy. Let's hope they get it right this time. Good to have you on the same team.

Have a great thanksgiving.

John

- The Ignorant Populist

November 26, 2008 at 5:26pm

I thought Nixon also had a "team of rivals" of sorts by demanding debate amongst his advisors.

It seems what TNR is really describing is not so much too many cooks but too many kitchens, viz. the creation of a new agency headed by Volcker.  I suppose this could work if the meal output is clearly defined - breakfast, lunch, dinner, snack, drinks, dessert? Gourmet, rustic, comfort, fast food? - and feeds the right hungers without duplicating efforts.  Otherwise, Obama would only create the waste he campaigned against.

- satyendra

November 26, 2008 at 5:52pm

Iggy, I was referring to the income tax overhaul bill that Reagan pushed through Congress in 1986.  One of it's hallmarks was 2 marginal rates, elimination of several loopholes and deductions and treating income, dividends, interest earned and cap gains all the same.  That was obviously changed/massaged/mangled by both Republicans and Democrats over the years.  I think it's a stupid move.  Reagan's tax reforms removed incentives to distort business decisions based to taxes.

An example: I design power management ICs for a living.  My designs are made in the US and exported abroad.  I think that's a good thing.  I also own stock/bonds though mutual funds and some individual stocks (both though IRAs/401k;s/regular taxable accounts).  I think it is downright criminal that my labor, which is real productivity and a wealth generator, is taxed at a higher rate than me sitting on my ass and getting dividends or cap gains.

And Wandrey, Obama isn't even paying lip service to accountability in this mess, especially to the financial geniuses that got us in this disaster.  I'm livid that he's not even gently chiding them but there's plenty of derision for the auto execs.  It's a brazen double standard.  Even Rachael Maddow along with people like Robert Reich are often bringing up the double standard.  I don't even hear the Congresslime say anything.  I for one will be writing to my senators and house rep bitching about how they are letting these bastards off the hook.  NOW is the time to point fingers and make sure most of these criminals end up in the klink.

- tnmats

November 26, 2008 at 6:12pm

Wandrey, if Labor is shafted by Obama, the Democrats better get ready to give the keys to the Congress to the Republicans in 2 years.  You can bet they will do nothing to help a Democrat in 2010.  We need to see perp walks, a lot of them.  It happened a lot in the S&L mess and even a few of them happened in 2002 after the tech bust.  This whole mess cries out for some criminal prosecutions.  The little guy that didn't have a hand in creating this mess like me won't stand for none of the bigshots being let off scott free.  I want more Robespierre.

- tnmats

November 26, 2008 at 6:16pm

It's late here Mat, I'm going to check out that Reagan bill. Sounds like it addresses the problem...exactly, which would create all sorts of ideological dissonance for me.

Interesting.

- The Ignorant Populist

November 26, 2008 at 6:35pm

Iggy, I was in grad school when Reagan was pushing for the bill.  He came to speak at NC State (my alma mater) and the speech was about tax reform.  It was quite peculiar that he gave a speech (rousing one at that), getting 15000 college kids riled up about tax reform.  Watching it all as one of those college kids was rather surreal.  I must admit that Reagan was a great speaker, especially in person.

The bill did dramatically simplify the tax code.  There were 2 marginal rates, 15% and 28%.  That bill was the one that did away with breaks on interest on consumer debt (auto loans, credit cards, etc.).  I remember the doomsday predictions from the car companies (foreign and domestic) that it would kill their business if the interest on car loans weren't deductible.  The same cries came from the loan sharks, er, credit card companies.  We all know how that worked out.  The one sacred cow Reagan didn't have much luck with was home interest deductions and deductions on state/local income taxes.  Some things were off limits even to the Gipper.

It also did away with any differences between cap gains, interest, dividends and income.  On your returns it was all lumped in as one taxable number.  During Clinton's term, namely pushed by the Gingrich clan, did we get the complexity being larded on again.  The 31% and then the 39% marginal rates were also added on during Clinton's term but Congress added on a lot of tax breaks that pretty much mitigated the new rates.  It was accelerated dramatically during Bush's two terms, with all the festoons we see now.  The fetish the R's have about cap gains taxes just stumps me.  I guess the monied class demands it so they dutifully oblige.

Reagan's reform was relatively revenue neutral but made tax forms simpler.  I know the tax accountants and lawyers weren't pleased.  Guys like me sure were.  Even complicated 1040 forms weren't the bizarre puzzler they are now.

Tom

- tnmats

November 26, 2008 at 7:45pm

there is no such thing when it comes to Obama. I have never seen anyone more able to synthesize so many view points and find coherency. Its almost like he thrives on it. He really loves debate and discussion.

Carol

- harriscrl3

November 27, 2008 at 2:52am

You bet tnmats, could not agree more.  Obama owes labor and they are the exact wrong group to make wait, both systemically and symbolically.

I had my hopes up when the first thing Obama did after being elected to start the momentum toward saving the car companies - it made economic sense framed as it was, a total black hole emergency (debateable in some sense, I know) but better yet, it fit his narrative of standing up for regular Americans. The best part was that it could be viewed as him stickimg his skinny neck somewhat out for labor.  The car companies are not popular in general, which is both fair and not, and the first thing Obama said to Bush was "Save those guys. Now."

BUT.  The execs self immoliated with their idiocy - I almost had to laugh about the private jets taken to beg for mney from Uncle Sam (after they've never bothered to retool, have fouled the earth for eight more years and screwed their workers). Of course the execs have big money in the bank while the people who have built their cars for generations could now be hosed - by their bosses shocking hubris.  NICE.

So, Obama I think did try to balance everything out, maybe a ittle too slickly.  Get his sconomic team in place, overloaded with centrists as he had to know.  Then make his move towards labor through advocacy alone right out of the starting gate, not a smal thing with the megaphone Obama has, then labor *might* be patient while he names everyone but them to an economic council.  Why should they?This backfired.

A postive about Obama is he's willing to listen and respond right away - I hope he does.  I'm sure his ear was chewed off a bit this week by some seriously unamused labor leaders.  Let's hope Obama rectifies.

- Wandreycer1

November 27, 2008 at 7:03am