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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:

The Justice Department is accusing Standard & Poor’s Ratings Services of defrauding investors with optimistic ratings of mortgage-backed securities and derivatives prior to the financial crisis. While investors are entitled to answers about those conflicts, compensation and reforms, the attorney general and president, by singling out S&P, instead of other bond raters, appear to be engaging in political vengeance and put freedom of speech at risk.

In 2011, S&P, Moody’s Investors Service and Fitch Ratings were accused by a Senate Committee of giving overly rosy ratings on mortgage-backed securities in the years prior to the financial meltdown of 2008, and then contributing to the severity of the crisis by hastily downgrading hundreds of securities after the housing bubble burst.

Notably, S&P, alone, in August of 2011 downgraded U.S. government bonds–causing the president considerable embarrassment at a time when his re-election was far from certain. And, this downgrade will raise U.S. borrowing costs, and ultimately curtail federal spending and the president’s progressive agenda, when the Federal Reserve deems appropriate to end quantitative easing, which is artificially depressing all interest rates.

Often, federal prosecutors, when several firms have engaged in unsuitable practices, will single out one to obtain damages and reforms, and then use that settlement to obtain concessions from the others; however, the selection of S&P certainly creates the appearance of sovereign and political abuse.

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:

On Friday, forecasters expect the Labor Department to report the economy added 113,000 jobs in September, a monthly pace too slow to return the nation to full employment.

The economy must add more than 375,000 jobs each month for three years to lower unemployment to 6% and that is not likely with current policies.

Most analysts see the unemployment rate steady at 8.1%, while a few see an increase. The wild card is the number of adults actually working or seeking jobs, the measure of the labor force used to calculate the unemployment rate.

Were the labor force participation rate the same today as when unemployment peaked above 10% in October 2009, the unemployment rate would still be about 10%. Were it the same as when President Barack Obama took office, it would be about 11%. Continue reading…

 A reader in California responds to Jared A. Favole and Tennille Tracy’s story “WSJE(4/18) Obama Seeks Oil-Market Curbs”:

President Barack Obama doesn’t realize that raising margin requirements outright would also make it more difficult for short sellers in the oil market.

Having traded oil futures for over 10 years, I understand how leverage and margin can affect the ability to create new positions in futures markets. If Obama wishes to limit the speculation that is pushing prices upward, he should only increase trading margin requirements on speculative long positions, not on short positions. This would give the advantage to short sellers, the ammunition they need to overpower the bulls.

If we’re going to pick winners and losers, for the sake of the country, the Commodity Futures Trading Commission must have policies favoring short sellers, as long as the price of oil remains above $100 and as long as large speculative noncommercial traders hold a net long position in oil futures contracts. Continue reading…

Gasoline prices are zooming past $4 a gallon, and the nation is hardly freer from the grip of imported oil or closer to robust economic recovery. With his approval ratings dropping precipitously, President Barack Obama is blaming speculators and investigating fraud and at the pump, when this mess is the direct result of failed federal energy policies.

By word and deed, the Obama administration has sought to limit off-shore oil exploration and development, and hasten the commercial viability of solar, wind and alternative vehicle technologies.

All this is based on two erroneous, but strongly-held beliefs among liberal policy makers, academics and pundits–increasing oil U.S. production would do little to lower U.S. gas prices, and but for the vested interests of multinational oil companies, mankind would have long ago harnessed renewable energy sources and freed itself from the sin of burning hydrocarbons. 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:

Rick Santorum’s assertion that President Barack Obama’s agenda is not about the quality of life or jobs but “some phony ideal. Some phony theology” may not be an appropriate characterization of his religious views. However, it is an accurate description of what is wrong with the hard left in American politics, and the thinking that drives domestic policy in the Obama administration.

Too often liberal policies are based more on faith than reason–often those are premised on assertions having little foundation in facts or modern economics. Consequently, the president advocates or imposes solutions that make the nation’s problems worse, and when confronted with disappointing results he often tells us what he believes, without offering the data and logic that brought him to those conclusions.

Regarding the financial crisis, the president assigns blame to the lack of regulation. The facts are banks got into trouble making loans on real estate assigned inflated values to borrowers who could not repay. Loans were bundled into bonds and sold to investors. When not enough unwitting fools bought bonds, the big Wall Street banks put unsold securities into offshore special investment vehicles (SIVs), whose potential losses were not supposed to be a claim on bank capital. Other firms, like American International Group Inc., sold insurance to against potential losses on bonds without sufficient assets to back up that protection. 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 fiscal 2013 budget projects a fiscal 2012 deficit (that’s the fiscal year ending in September) at $1.3 trillion–up from less than $1.0 trillion a month ago. However, like all presidents with lots of red ink he is promising to dramatically reduce the deficit by the time his successor takes office.

The budget projects a $612 billion deficit in FY2017–if Congress follows the president’s prescriptions to raise taxes on the wealthy and if we buy the president’s growth assumptions.

The budget assumes Mr. Obama will have a second term that astounds economists–his budget assumes 3.9% growth from 2014 to 2017. That is well beyond what most private economists would concede is likely.

If you believe that one, New York Mayor Michael Bloomberg is selling shares in the Brooklyn Bridge.

The author can be reached at pmorici@rhsmith.umd.edu and followed on Twitter at @pmorici1.

  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:

Mitt Romney lost South Carolina by failing to convince voters he has the character and platform to turn the country around.

South Carolinians, burdened by shuttered factories, high unemployment and vanished dreams, keenly see problems. Large corporations, sitting on $2 trillion in ready cash, invest too little in American jobs, and instead move production and research and development to Asia as quickly as they can.

President Barack Obama has further tilted the playing field in favor of Asian venues by tolerating higher tariffs, more discrimination in government procurement and increased manipulation of currency values by China and others. He has raised the cost of doing business in the U.S. by shutting down oil production, raising health-care costs and tolerating the monopolization of commercial banking by Wall Street.

Mr. Romney promises to aggressively develop domestic oil and stand up to China, but will encounter fierce opposition from Democrats in Congress on energy issues, and from them and House Speaker John Boehner (R., Ohio) on China. In addition, Wall Street bankers are among Mr. Romney’s largest campaign contributors, and they don’t want China confronted. 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 is at it again. The economy stuck in first gear, the president is again indulging in revisionist history–blaming the rich and his predecessors for high unemployment and misadventures in statism. Sadly, his claims are all too easy to debunk.

On ’60 Minutes,’ Mr. Obama declared about the economy he “didn’t overpromise.. And I didn’t underestimate how tough this was going to be.”

Certainly, Mr. Obama took office in a maelstrom–banks failing on the wreckage of their own frauds, unemployment at 7.8% and gross domestic product falling. At his request, the Congress funded a $759 billion stimulus package. And the Congress looked the other way when the president misallocated Troubled Asset Relief Program funds to bail out General Motors and Chrysler, and awarded huge sums to startup energy companies with significant involvement from among Democratic Party faithful.

With his program implemented, Mr. Obama issued new federal budget and economic forecasts in May 2009 that projected unemployment and GDP growth would average 7.1% and 4.0% in 2011, and 6.0% and 4.6% in 2012. White House economists Larry Summers and Christina Romer numerously repeated presidential assurances that prosperity was just a few big government steps away. Continue reading…