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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

President Barack Obama is failing as the chief executive of the U.S government. His appointment of Susan Rice to be his top national security adviser and other missteps, indicate he views the fallout from recent scandals as a political challenge, rather than a management failure. Nothing could be less true or more damaging.

Revelations about the Internal Revenue Service targeting conservative groups, the Justice Department broadly searching the emails of journalists, and recent revelations indicate systemic management dysfunctions, and a culture of contempt for the protections of individual rights and the limits on the executive power required by the Constitution.

His stockholders–the American people–are rapidly losing confidence in his management. In a recent Wall Street Journal/NBC News poll 55% of respondents said IRS targeting of conservative groups raised doubts about the broader honesty and integrity of his administration.

Yet, Mr. Obama is behaving as if all the turmoil on Capitol Hill and the media come down to Republican gaming in preparation for the 2014 congressional elections.

By appointing Susan Rice as National Security Adviser, the woman who misled Americans into believing the murder of U.S. diplomats in Benghazi was the result of spontaneous street demonstrations when the State Department simply knew otherwise, he is challenging the GOP to stop him if they can, instead of committing to get to the root of recent scandals and fixing what is broke.

Similarly, the president sent up three very liberal nominations for the pivotal D.C. Circuit Court of Appeals, where the constitutionality of many presidential actions is determined. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

To avert the fiscal cliff, President Barack Obama may get Republican cooperation in soaking the rich, but the deal that emerges could put the nation in dire straits by the end of the decade.

The Budget Act of 2011 requires the president and Congress to cut federal deficits by $1.2 trillion over nine years, or annual defense and nonentitlement outlays automatically will be reduced $107 billion annually in January. Also, the Bush tax cuts, payroll tax reductions and other assorted programs expire.

Overall, annual spending would be cut $136 billion, taxes raised $532 billion, and economists fear a staggering recession would result pushing the unemployment rate into the teens.

President Obama wants to raise tax rates on families and many small businesses earning more than $250,000, and Congressional Republicans would like to curb entitlements by increasing Medicare premiums paid by wealthier participants and slowing Social Security cost of living increases. Continue reading…

  These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

In his State of the Union Address, President Barack Obama hammered on two resounding themes–fairness and the economy.

Both hollow from a president who has failed on the job. He has not kept his promise to get the economy going again, and inequities in income and opportunities have hardened during his tenure. Scratch the surface of his largely reworked proposals, and too much political opportunism and hypocrisy emerges.

Once again, he promised to tax the wealthy and lambasted oil companies, and offered the vision of an economy where every American has a decent shot at success through education and hard work. Yet, too many of his tax proposals are intended to punish his opponents and protect his friends, and his education proposals simply won’t help the unemployed if the economy is creating too few new jobs each month.

The big fairness problem with taxes is that wage and salary incomes are taxed at much higher effective rates than capital gains and carried interest in partnerships–the latter include the income managing partners and employees receive for running private equity firms and hedge funds.

Mr. Obama’s minimum tax for millionaires would punish mom and pop businesses that create so many of the new jobs, as well as raise taxes on capital gains and carried interest. For the former reason, such a tax simply won’t pass the Republican House. Doing more to tax investment income would upset lots of Democrats and Wall Street financiers, and consequently, the president won’t do much to surgically fix that problem. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Whether the Joint Select Committee on Deficit Reduction reaches a deal to reduce the federal deficit by at least $1.2 trillion or stalemates on Nov. 23, Democrats appear intent on handicapping the national economy with higher taxes and imperiling national security by cutting defense. Those are the wrong places to solve the nation’s budget woes.

In 2007, just prior to the financial crisis and when Democrats took control of Congress, the deficit was a manageable $161 billion. Wars in Iraq and Afghanistan were ongoing, and Bush tax cuts and prescription benefits for seniors were in place.

In 2011, two years after the recession ended, the deficit is $1.3 trillion. Spending is up $847 billion, and additional temporary tax cuts–such as the payroll tax holiday–account for the rest. Of the $847 billion, only $62 billion was necessary to accommodate inflation, and social security, health care and other entitlements account for 78% of the rest.

Repeatedly, Democrats President Barack Obama and Majority Leader Harry Reid have exhorted Social Security is not contributing to the deficit, but the program began paying out more than its receipts in 2009, and the Trust Fund will be entirely depleted by 2036. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

President Obama’s plan to balance the budget was a brilliant political speech–highlighting weakness in the Republican deficit reduction proposal drafted by Congressman Paul Ryan–but it offered little new or encouraging that would correct Washington’s troubled finances.

Once again, President Obama blamed President Bush for the mess–citing two wars and tax cuts that were not funded–when his own political party is more culpable.

In 2007, the last year before the financial crisis and when former Speaker Nancy Pelosi and the Democrats took control of Congress, the deficit was a quite manageable $161 billion. Over the next four years, spending has increased $1.1 trillion and the deficit jumped to $1.6 trillion.

The President’s February budget projected the deficit would fall to $772 billion by 2022. However, that forecast is dubious, because it assumes 4% growth over the next four years, which few economists would endorse, and cuts in Medicare payments to physicians and hospitals few political observers believe will materialize. More likely, deficits will exceed $1 trillion, or even $1.5 trillion for the next decade, without further action.

In his speech the president claimed to be tabling $4 trillion in additional cuts over twelve years, but there was little new from his February budget.

Obama proposed higher taxes on families earning more than $200,000 a year. While that may be good populist politics, those tax increases were already in his February budget, and presenting those as additional deficit reduction is deception not worthy of his high office.

Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

The economic consequences of a U.S. government shutdown can’t be calibrated on a spreadsheet with an economic model. It all depends on who wins public opinion–Congressional Republicans or the president and Democrats.

Federal spending is out of control. From 2007, the last full year before the financial crisis, to 2011, the second full year of economic recovery, spending has jumped $1.1 trillion, 40%, when a $200 billion increase would have satisfied inflation.

For any other country, a deficit exceeding 10% of gross domestic product would force austerity by sending interest rates on government bonds through the roof. Alas, the U.S. prints the world’s currency–the dollar–so it can inflate its way to solvency, and the bond market is starting to take that bet.

Enter the Tea party, that troublesome bunch of youngsters pushing elder Republicans to stand up for fiscal solvency, end the madness or halt funding for the government.

Closing federal offices for a few days will have not a great, lasting impact. On reopening the checks will go out. What counts, though, is whether the newly elected conservative majority in the House of Representatives keeps its mandate as measured by the polls.

Continue reading…