Talk Back

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:

Occupy Wall Street may be out of Zuccotti Park but Americans ignore its message only at their peril.

Dispossessed by police from prominent venues around the country, the forces that inspired mass, albeit unseemly demonstrations have not abated. America is rapidly fracturing into two nations–affluent players in the global economy and a growing mass facing diminished circumstances for themselves and their children.

If forces marginalizing millions are not addressed, America is headed for much worse than tent cities and baths in parks. Economic bifurcation into the super affluent and the poor will erode the institutions and values that bound together immigrants from many heritages, faiths and tongues into a single nation.

The Census Bureau reports about 100 million Americans–one in three–live in or perilously close to poverty. Many are working but rely on food stamps, government agencies and charity to feed, clothe and provide medical care to their children. Most have too few resources to see a dentist regularly or even subscribe to a daily newspaper. They rely on cars, often because decent housing is much too costly near their work, and are forced to live too inconveniently from grocery stores, other services and multiple jobs to practically rely on public transportation. Continue reading…

These are the views of Thomas Lam, group chief economist at OSK Group/DMG & Partners:

Clearly, financial markets thirst for clues from the prepared remarks of Chairman Bernanke and President Obama on Thursday. But the reality of the situation is that policy recommendations from the president and chairman are not likely to sail through without hurdles and bumps.

Given the earlier extension of the September FOMC meeting to two days to allow for more collective discussions, it was apparent that Bernanke was unlikely to litter meaningful hints in his speech roughly two weeks prior to the meeting. Indeed, the latest speech from Bernanke more or less mirrored the gist of the August FOMC minutes and his Jackson Hole remarks about two weeks ago. The most likely outcome is for the FOMC to embark on some type of asset maturity extension, perhaps by raising and flexibly targeting the average maturity of the Treasury portfolio, together with additional guidance on the future level of overall security holdings (while maintaining the size of the balance sheet) at the September meeting. 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 Barack Obama’s State of the Union address and Rep. Paul Ryan’s Republican response offered few new ideas and weren’t forthright about what needs to be done to get America thriving again.

The November elections plainly established voters want less government and a focus on jobs, and they don’t believe Americans have to choose between the two.

President Obama proposed freezing domestic discretionary spending to reduce the deficit by $400 billion over 10 years, but he offered no substantive changes to Medicaid, Medicare, Social Security and other entitlements. That simply doesn’t cut it.

In 2007, the year before the recession, government spending was $2.7 trillion–less than 20% of gross domestic product–and the deficit was a manageable $161 billion. In 2011, with the economy recovered, spending will top $3.8 trillion–more than 25% of GDP–and the deficit will be about $1.4 trillion

Simply, the Democrats took control of the Congress in 2007 and used the recession as cover to permanently increase spending on the regulatory bureaucracy, entitlements and industrial policies by $1.1 trillion, and the leading edge of the Baby Boomers has begun to tax the Social Security and Medicare trust funds.

Now, the president proposes to address about 40% of the gap over the next decade. Essentially, he is laying a trap–daring Republicans to solve runaway health-care costs and Social Security, knowing how Americans react to the bearers of bad news.

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:

Republicans don’t have a mandate to impose a rigid conservative agenda.

Voters want less government and smaller deficits but polls indicate upward of 80% want Republicans to compromise with Democrats to get things done.

Like Bill Clinton in 1992, Barack Obama mistook his 2008 victory as a mandate for an aggressive liberal agenda–socialized medicine, bailouts for Detroit and Wall Street, and an obsession with race and gender on everything from preschool enrollment to judicial nominations.

Like Clinton, President Obama got his House Speaker fired.

To keep their gains, Republicans must work with the president on taxes, spending, regulation, health care and trade.

President Obama wants higher taxes on families earning more than $250,000. That would catch 50% of small business profits and stifle jobs creation. Republicans should settle for repealing the Bush tax cuts for families above $1 million and declare victory.

Without legislation, the estate tax snaps back to 55% with a $1 million individual exemption in 2011. President Obama advocates 45% and $3.5 million, while many Republicans would prefer 35% and $5 million.

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:

No economic policy could better serve Americans than genuine free trade but open trade policies are failing Americans.

Free trade is a compelling idea. Let each nation do more of what it does best, and specialization will raise productivity and incomes.

Americans are not sharing in those benefits because President Barack Obama, like President George W. Bush, permits China and others to cheat on the rules, unchallenged, to the detriment of the U.S. interests he was elected to champion.

The World Trade Organization has greatly reduced tariffs, prohibits virtually all export subsidies, and regulates other national policies that could subvert trade, such as health and product safety standards arbitrarily slanted to favor domestic suppliers. Continue reading…